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Work out detailed strategy to boost intermediate goods sectors
The Ministry of Trade, Industry and Energy has announced the Yoon Suk-yeol administration's material, parts, and equipment industrial policy direction. The five-year plan calls for, among others, expanding the number of core strategic technologies in relevant industries from 100 to 150. The ministry changed its previous focus to reorganize the supply chain and respond to the future industrial demands in developing the material, parts, and equipment sectors over the next five years.
The government's strategic shift reflects the prolonging of Russia's war in Ukraine and the U.S.-China struggle for technological hegemony. So far, Korea's strategy in these sectors has targeted effectively responding to Japan's export restriction and efficiently supporting flagship industries. The revised strategy calls for strengthening core technologies in the semiconductor, display, and electrical and electronic fields, adding the bio-industry and diversifying target items.
Material, parts, and equipment industries still constitute the foundation of "technology," the core of Korea's competitiveness. Since the outbreak of COVID-19, non-face-to-face platforms have been in the spotlight, and various artificial intelligence (AI) services have also appeared. Still, one can hardly overemphasize the need to strengthen the competitiveness of these industries as the roots of the nation's economy.
This is the fourth year since Japan started a "trade war" with Korea by restricting exports. Tokyo used its greatest weapon of banning the shipment of materials, parts, and equipment, the Achilles' heel of Korea's industry. Some say that the Japanese move served as an opportunity to nurture Korea's small but strong businesses. However, policymakers can ill afford to forget the sense of crisis that hit Corporate Korea three years ago.
The government needs to specify its strategy to bolster these intermediate goods industries. For instance, policymakers should divide core technologies into three types: those which Korea must localize at any cost, those for which the nation should seek international cooperation, and those in which Korea must excel to lead global markets. Additionally they must provide R&D support and manage their outcomes far more meticulously than now.
