FKI: Long-term Government Support and Regulatory Innovation Needed for New Industry's Global Competitiveness

[Asia Economy Reporter Ki-min Lee] To survive the competition with major countries surrounding new industries such as future automobiles and artificial intelligence (AI), it was pointed out that the government must implement long-term support measures while breaking down regulatory barriers.

The Federation of Korean Industries (FKI) made this claim on the 6th through a report titled "Current Status and Implications of Major Countries' New Industry Support Policies," commissioned to Professor Jeon Seong-min of Gachon University College of Business.

According to the report, major countries such as the United States, China, and Germany are accelerating the establishment of commercial infrastructure, including expanding communication networks and charging facilities, as well as providing subsidies to promote the spread of electric, hydrogen, and autonomous vehicles.

The United States has been implementing the electric vehicle promotion plan called ‘EV Everywhere’ since 2012, which includes funding of $8 billion (approximately 9.52 trillion KRW) to reduce oil consumption in automobiles by 50% by 2030. It has also announced guidelines such as the 'Federal Autonomous Vehicle Guidelines' and 'Autonomous Vehicle System 3.0' to promote autonomous vehicle adoption.

China is also aiming to lead future automobile technology development and global standards through policies such as the ‘Automobile and Electric Vehicle Industry Development Plan’ and 'Made in China 2025.' In particular, it established the automobile and electric vehicle industry development plan in 2011 and has invested 100 billion yuan (approximately 18.5 trillion KRW) over ten years in electric vehicle development and distribution.

Germany is similarly promoting the ‘Electric Vehicle Development Plan,’ which focuses on electric vehicle battery research and development, intelligent power grid construction, and tax support for electric vehicle purchases. Additionally, to achieve the goal of commercializing 1 million electric vehicles by 2022, it plans to expand the number of electric vehicle models from 47 in 2018 to about 75 models by this year.

The report also explained that major countries are actively engaged in supporting AI and data technologies, which are expected to create high added value, by relaxing regulations on applicable industries and establishing comprehensive development strategies.

Last year, the United States announced plans to expand AI research and development (R&D) investment, open information infrastructure to academia and industry, foster AI talent, and open AI markets.

The United Kingdom also signed a public-private partnership called the ‘AI Sector Deal’ in 2018, worth ?1 billion (approximately 1.55 trillion KRW), to support specialized personnel and invest in the private sector.

Japan has introduced the ‘AI Industrialization Roadmap’ and 'AI Strategy 2019,' implementing strategies to create an AI ecosystem that complexly connects all areas of the economy and society, as well as fostering AI talent and establishing an educational network.

Although the Korean government has been announcing various new industry support policies and making efforts such as introducing regulatory sandboxes, the report evaluated that it still falls short of the standards of major countries.

According to the 2019 National Competitiveness Ranking released by the World Economic Forum (WEF), Korea ranked 87th out of 141 countries in terms of government regulatory burdens restricting business activities, and 76th in the stability of government policies, which is very low compared to major countries such as the United States and Germany.

The report also cited the 'Tada Ban Law (Amendment to the Passenger Transport Service Act)' as a representative case, pointing out that "the role of regulatory coordination between existing business stakeholders and new entrants is insufficient."

Yoo Hwan-ik, head of the Corporate Policy Office at FKI, stated, “As competition to foster new industries among major countries intensifies, efforts to eliminate regulations that hinder innovation must continue even in difficult times due to the novel coronavirus (COVID-19).” He also emphasized, “For new industries where market validation and competitiveness are difficult to achieve in the short term, continuous government support from a long-term perspective is essential.”

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