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| President Moon Jae-in presides over strategy meeting for innovation growth at Cheong Wa Dae Nov. 28, 2017. Korea Times photo by Ko Young-kwon |
Moon administration vows to place priority on AI, hydrogen economy
By Lee Kyung-min
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To that end, the government is seeking to create what it dubs a "platform economy," a comprehensive ecosystem and infrastructure for future industries, in a gradual move to become a global information technology (IT) powerhouse in the digital era.
The initiative is part of comprehensive efforts to strengthen the government's role in providing large-scale infrastructure crucial for private entities to continue with long-term business plans, a much-needed growth engine for Asia's fourth largest economy that is increasingly being challenged by a mixture of domestic and global uncertainties.
Under the new initiative, the government will seek to help foster innovation by creating an environment conducive to entrepreneur spirits amid continued calls for deregulation.
The initiative is expected to help the country break out of the protracted deadlock long defined by an economic structure heavily reliant on selected IT products, a reason critics say requires a fundamental structural reform toward a more diversified growth model that can help the small and open economy better weather external shocks.
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| Then-Finance Minister-designate Hong Nam-ki speaks at his confirmation hearing at the National Assembly, Dec. 4. He took office Dec. 11. Korea Times photo by Oh Dae-geun |
New Finance Minister Hong Nam-ki, who took office Tuesday after getting approval at a confirmation hearing at the National Assembly, Dec. 4, reiterated that he would do his best to achieve innovation-led growth.
Hong said a comprehensive plan will be rolled out in the first half of 2019, indicating key deregulation measures will follow in the sectors of tourism, medical services, logistics and game content.
He is expected to focus on eight key leading industries: hyperconnectivity, smart factories, smart farms, fintech, new energy, smart cities, drones and future cars.
3 key pillars
To ensure the successful transformation into an innovation-driven economy, the government has vowed to foster three core sectors ― data management, artificial intelligence (AI) based smart technology and a hydrogen economy.
The government said those sectors deserved prompt nurturing based on the assessment that a timely state support will help them take the initiative in the highly competitive industry and stay ahead in the global stage.
About 200 billion won ($176 million) will be spent on data management in the sectors of energy, the environment, telecommunications and finance, as well as an effective management of the public administration in traffic control, with ten more specific areas to be selected soon based on the importance and growth potential.
Stored data in the sectors will be made available for future references and be used for marketing. A broader network will be established with tighter integration among such sectors by 2021.
Blockchain technology will be utilized for the stable and accountable management of the data.
Blockchain, known to be resistant to data modification, is considered an efficient, verifiable and permanent method of keeping record of transactions between parties given that the data recorded cannot be easily altered retroactively, which helps ensure accountability.
The new technology will be used in customs clearance and online voting in public sectors. Online music piracy will be prevented and safety management failures in food ingredient will be eliminated through the blockchain-based tracking system.
The stored data will be optimized for further analysis for research and development.
Some 100 billion won will be spent to help guarantee access to data for small- and medium-sized firms (SMEs) that do not have as much resources as their larger counterparts.
Startups will be offered to use IT-related programs where they can utilize IT technologies integrated with their business.
For hydrogen energy, the government will subsidize companies that develop, use the clean energy, with additional support with the energy storage and transportation, following an assessment that the new, environmentally friendly alternative will help the country become environmentally responsible and achieve growth.
Ministry of Science and ICT, Ministry of Trade, Industry and Energy and Ministry of Land, Infrastructure and Transport plan to launch 15 related projects in 2019.
The move to abandon fossil fuel, the overuse of which has raised a shared awareness on the need to move toward a hydrogen economy for environmental protection, is in line with Moon administration's energy policy largely defined by nuclear phase-out initiative.
International Energy Agency said the hydrogen energy was the future that would soon replace fossil fuel.
IMF recommendation
The initiative is in line with recommendations from the International Monetary Fund (IMF).
IMF country report released in February 2018 said Korea should boost productivity by pursuing policy towards SMEs that prioritize fostering growth and innovation, rather than shielding weaker firms.
"Enhancing the design of incentives to innovations and Research and development programs would help boost innovation and productivity growth. There is scope to better design and coordinate Research and development support."
The international body also said Korea requires shifting size-based subsidies and tax incentives to targeting young firms to enhance incentives for firms to grow.
It said invigorating research in higher education institutions should be achieved by expanding international collaboration and competition to foster innovation.
Research and development incentives, it added, should not discriminate against certain service industries and should be well tailored to special needs of nascent firms.
