Gov’t launches innovation push

Finance Minister Kim Dong-yeon, second from right, speaks during a meeting of economic ministers on Monday at the government complex in central Seoul. [YONHAP]

The government released a plan to invest 5 trillion won ($4.4 billion) next year in three strategic technologies and eight leading industries that it hopes will spur economic growth and create jobs.

On Monday, Finance Minister Kim Dong-yeon said the government plans to spend 1.5 trillion won on the strategic technologies ? big data, blockchain and the sharing economy, which it calls the platform economy, artificial intelligence and hydrogen power. Additionally, 3.5 trillion won will be spent on the eight leading industries ? smart factories, smart farms, fintech, new energy development, smart cities, drones, future vehicles and biohealth.

“The 5 trillion won investment is more than 2 trillion won more than this year’s,” Kim said Monday during a top government official meeting on innovative growth.

The 1.5 trillion won investment in the three strategic technologies is 71 percent more than this year’s 900 billion won budget, while the 3.5 trillion won dedicated to the strategic industries is a 62 percent increase from last year’s 2 trillion won.

Kim said that the government plans to invest between 9 and 10 trillion in the three strategic technologies in the next five years.

The government will invest over 1 trillion won in smart factories, 240 billion won in smart farms, 10 billion won in fintech, 870 billion won in energy, 130 billion won in smart cities, 120 billion won in drones, 760 billion won in future cars and 350 billion won in biohealth.

Since the second half of this year, the Moon Jae-in government has increased its focus on innovative growth as its income-led growth policy centered on increasing the minimum wage has faced strong public blacklash. While labor unions have demanded that the government immediately raise the minimum wage to the 10,000 won per hour that it promised, the business community has complained over the high costs this increase will incur.

The solution that the government has turned is innovative growth, and it’s letting the finance minister take the lead.

Many have long argued that Korea’s economic structure needs to be changed to focus more on high-tech industries, as other business are struggling with growing competition from emerging economies such as China.

According to a report by the state-run Korea Development Institute (KDI) released on Monday, the growth of Korea’s manufacturing output has been falling. The annual growth of Korea’s manufacturing output between 1995 and 2000 was 7.3 percent, but it fell to 3.1 percent between 2010 and 2013.

During the meeting, Chang Byung-gyu, the Chairman of the Presidential Committee on the Fourth Industrial Revolution, stressed the need for private-sector help in revitalizing the economy.

“There are those that criticize the government’s selection of hydro-economy as a key technology as a policy that supports Hyundai Motor Group,” Chang said.

He argued that despite being a large conglomerate, the government should encourage Hyundai Motor if it is engaging in innovative projects like hydrogen car development.

Top government officials that attended the meeting included Minister of Trade, Industry and Energy Paik Un-gyu; Minister of Agriculture, Food and Rural Affairs Lee Gae-ho; Minister of Health and Welfare Park Neung-hoo and Minister of Interior and Safety Kim Boo-kyum.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]