Government Announces Second Phase of SoBuJang Policy: "Fostering Advanced Industries and Attracting U-Turns and Investments"

Joint Strategy on 'Materials, Parts, and Equipment 2.0' Presented by Relevant Ministries on the 9th
Over 5 Trillion Won Investment by 2022 in SoBuJang and Next-Generation Technologies

Sung Yun-mo, Minister of Trade, Industry and Energy./Seongnam=Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Moon Chaeseok] The government announced plans to increase the added value of the materials, parts, and equipment (MPE) industry, focusing on advanced industries such as semiconductors, bio, and future cars (Big 3). The number of supply management items will be expanded from 100 to 338, and more than 5 trillion won will be invested in technology development by 2022. New advanced investment zones will be established to meet corporate demand.

On the 9th, the government, in a joint announcement with the Ministry of Trade, Industry and Energy and related ministries, unveiled the "MPE 2.0 Strategy" containing these details. Sung Yun-mo, Minister of Trade, Industry and Energy, stated, "Through this MPE 2.0 strategy, we have prepared a blueprint to proactively and aggressively respond to the global supply chain restructuring," adding, "We will push forward with strong determination to make this the starting point for becoming a strong MPE powerhouse and a global factory for advanced industries."

The core of this strategy goes beyond responding to Japan's export restrictions and aims to proactively lead the restructuring of the global value chain (GVC) by strengthening MPE competitiveness. The number of supply management items will increase from the existing 100 to 338+α, and over 5 trillion won will be invested in core MPE technologies and next-generation strategic technologies by 2022. In particular, 2 trillion won will be invested next year in developing the Big 3 industries, with detailed plans to be announced next month through a "Joint Ministry MPE Research and Development (R&D) Advancement Plan."

The government plans to strengthen connections between advanced industry demand companies like SK Hynix and partner companies such as Soulbrain, which contributed to the domestic production of liquid hydrogen fluoride, forming clusters of such companies to reduce supply dependence on specific countries.

Minister Sung also said, "We will design attraction strategies centered on the Big 3 and advanced MPE sectors and focus our capabilities on attracting about 100 core companies, including those returning to Korea," adding, "To this end, we plan to enhance customized incentives such as investment tax credits and cash support, expanded facility investment support for returning companies, and creation of purchase demand."

Furthermore, the government will upgrade the MPE industry by establishing new advanced investment zones. By the end of this year, the Industrial Cluster Activation Act will be amended to designate some existing industrial complexes and MPE specialized complexes as investment zones. Companies related to the 158 items classified by the government as advanced types will be the main tenants of these investment zones. Support measures will include special exceptions on land use regulations, reduction of charges, and priority review in regulatory free zones.

A "Special Committee for GVC Restructuring Response" will be newly established within the MPE Competitiveness Enhancement Committee. The Supply Response Support Center will be strengthened from a Japan response organization to a GVC response organization, with a permanent monitoring system in place. In the event of a supply crisis, "Emergency Supply Stabilization Adjustment" will be immediately implemented. Companies, research institutes, and related organizations will concretize cooperation on semiconductor clusters, electronics company returns, R&D center attraction, and advanced company investments.

However, policies included in the MPE 2.0 strategy such as attracting returning companies and inducing foreign direct investment (FDI) have been evaluated as below expectations. Professor Jung In-gyo of Inha University's Department of International Trade said, "The government's GVC restructuring measures seem somewhat weak in intensity as they are mainly focused on strengthening MPE policies," adding, "Alongside the MPE-centered GVC restructuring strategy, policies should be implemented in parallel to establish a foundation for companies to independently restructure GVCs and cooperate on MPE through redefining relations with Japan."

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