"High-Value Market Creation, Export Expansion, Digital Transformation"... Government Announces 'Engineering Industry Innovation Strategy'

Announcement after Deliberation at the National Policy Coordination Meeting... "Aiming to Strengthen Digital Engineering and Export Competitiveness"
Public Institutions and Private Companies Collaborate to Identify and Promote 8 Pilot Projects on Power, Gas, and Infrastructure Aging

[Asia Economy Reporter Moon Chaeseok] The government has declared its intention to create a high value-added market in the engineering industry and enhance digital transformation and export competitiveness. This is to strengthen the driving force for innovative growth by focusing on industries with significant industrial ripple effects and effective employment increases.

On the 7th, the government, after deliberation at the 105th National Policy Issue Inspection and Coordination Meeting chaired by Prime Minister Chung Sye-kyun, jointly announced the "Engineering Industry Innovation Strategy" with related ministries. It stated its commitment to supporting the innovative growth of our industry by strengthening engineering capabilities.

According to the Ministry of Trade, Industry and Energy, the forward linkage effect of the engineering industry is 1.23, which is greater than manufacturing at 1.03 and services at 1. The employment inducement coefficient is also 11 people per 1 billion KRW, higher than construction at 10.2 and the average of all industries at 8.

The government will pursue four major tasks under this strategy with the goal of "strengthening digital engineering and export competitiveness."

The four major tasks are ▲ creating a high value-added market within engineering ▲ expanding the export base of our companies mainly in the New Southern region ▲ digitalizing engineering based on big data and artificial intelligence technology ▲ establishing a fair industrial ecosystem.

First, to create a domestic market in the high value-added areas of project management and integrated operation management, pilot projects will be discovered using public institutions. After accumulating achievements, overseas joint ventures between public institutions and engineering companies will also be promoted.

Until now, public institutions have conducted their own projects in this field, resulting in a lack of business opportunities for the private sector. It is also a market monopolized by advanced country companies such as those from the United States, Canada, and the United Kingdom, making overseas expansion challenging for our companies.

The government noted last year's case where Korea Aerospace Industries, along with three companies including Dohwa Engineering, won the overall management part of a $30 million project out of a $500 million Peru Chinchero New International Airport project management contract.

To increase such cases, the government plans to discover and promote eight pilot projects (three in project management and five in integrated operation management) involving public institutions and private companies, verify their results, and expand them.

Pilot projects will be discovered starting from the energy sector such as electricity and gas. The integrated operation management field is expected to contribute to safety enhancement in response to aging infrastructure. Participating public institutions will receive additional points for government-supported projects, support for demonstration and commercialization, and awards as excellent cooperating public institutions.

Exports will be increased to reduce the excessively high domestic dependence. This is to change the reality where about 90% (7.4 trillion KRW) of the total orders of 8.4 trillion KRW last year were concentrated in the domestic market.

Experienced retired personnel will be matched, guarantees expanded, insurance products developed, support through government-to-government cooperation channels increased, and feasibility study support expanded. In particular, support will be strengthened mainly for the New Southern region, which has many achievements and great potential for future expansion.

Support will be provided for feasibility studies and technology development needed by companies entering high value-added areas such as project management and integrated operation management.

Digitalization will be promoted based on technologies such as big data and AI. Since "digital engineering" is still in the early stages even among advanced overseas companies, it is an excellent opportunity for our companies to gain competitiveness.

Projects are becoming larger and more complex, leading to frequent design errors and problems such as incorrect quantity and cost calculations. Since these issues critically affect profitability, minimizing them is expected to strengthen corporate competitiveness.

The government will build integrated big data covering the entire engineering cycle from design to integrated operation management together with the industry. To this end, platform development, data conversion, and standardization technology development will be promoted.

The core data for big data construction will be collected from public institutions holding data on infrastructure design and operation, and companies participating in government-supported projects. The government will support companies' costs to convert existing data into digital data and plans to collect some of that data.

The government has already identified that more than 40 companies are willing to participate in building engineering big data. An industry-academic-research council including public institutions, IT solution companies, universities, and research institutes will be formed to provide support.

AI technology will be added to the collected data to develop ▲ design verification technology that detects errors ▲ technology that automatically generates designs when inputting requirements ▲ equipment tracking technology for real-time process management ▲ accident and failure prediction technology for facilities and equipment.

The government will create an environment where companies can receive appropriate project compensation. The standard labor input norms (number of personnel per unit task), which are the basis for labor cost calculation, will be expanded from the current 12 cases to 44 by 2022. The system that induces low-price bidding will be improved by strengthening relative evaluation focusing on technical skills.

Minister Sung Yun-mo of the Ministry of Trade, Industry and Energy said, "Engineering is an important national strategic industry directly linked to the competitiveness of many related industries such as construction, plants, and manufacturing. Since there is no future for the industry focusing only on construction and detailed design, we will gather domestic capabilities and boldly challenge high value-added areas and digital transformation to create a turning point in the global market."

The Ministry of Trade, Industry and Energy said this strategy is a statutory plan (Engineering Industry Promotion Plan) under the Engineering Industry Promotion Act and that it will regularly check and supplement the implementation status to ensure the four major tasks are carried out smoothly over the next three years.

This content was produced with the assistance of AI translation services.