Daejeon as an AI City, Jeju for Renewable Energy... Regional New Deal Initiatives 추진한다

President Moon Jae-in Chairs the 2nd Korea New Deal Strategy Meeting

[Image source=Yonhap News]

[Sejong=Asia Economy Reporters Kim Hyun-jung, Joo Sang-don, Jang Se-hee] Through the Korean New Deal project led by the government, Daejeon will be developed into an AI-based intelligent city, while Jeju Island and Jeonnam Province will each promote renewable energy and offshore wind power generation as key tasks for local governments. This is the blueprint for the so-called 'regional balanced New Deal,' presented as a major pillar of the New Deal project. However, as large-scale projects are being sporadically promoted in each region, there are also concerns that budget and execution management by the central government are necessary.

On the morning of the 13th, President Moon Jae-in presided over the '2nd Korean New Deal Strategy Meeting' at the Blue House State Guest House to officially promote the 'Korean New Deal with the Regions' and announced these plans. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, explained the regional balanced New Deal project that day, saying, "It is a project implemented in regions within the Korean New Deal, and its effects are centered on those regions. Since tangible results that citizens can feel, such as job creation, revitalization of the regional economy, and balanced development, are important through the success of the Korean New Deal, the central and local governments will creatively and actively work together to spread the regional balanced New Deal."

◆136 Local Governments Independently Discover and Promote Projects= The local government-led New Deal projects are summarized as a method where each local government discovers and promotes projects by leveraging their own characteristics. The government and local governments believe that promoting projects optimized to regional characteristics and needs will increase budget execution efficiency and contribute to balanced development. Currently, 136 local governments, including 11 metropolitan governments and 125 basic local governments, are planning regional New Deal projects.

Accordingly, Seoul is promoting the establishment of a smart city platform (6S) and the conversion of public buildings to zero-energy buildings (ZEB) as part of its digital projects. As a social safety net project, it plans to focus on strengthening the digital capabilities of vulnerable groups. Daejeon City proposed an 'AI-based intelligent city,' collaborating with the Daedeok Research and Development (R&D) Special Zone, where research institutes, universities, and companies are concentrated. As part of green projects, it introduced the 'Green Waterway in the City' project, and as a safety net project, it highlighted employment stability and job support.

Gyeonggi Province plans to build a public data system involving residents to create a virtuous cycle where residents benefit from the activation of the data economy. It will also create a public delivery platform, operate a project to save electricity for 100,000 households, and run a labor safety guardian program.

In Gangwon Province, based on the 'Liquid Hydrogen Regulatory Free Zone' designated in Samcheok, Donghae, and Gangneung, it plans to develop and utilize technology in the eco-friendly energy liquid hydrogen sector to promote new industry growth. Jeonnam Province will develop an offshore wind power complex in Sinan to advance the energy industry and engage in win-win job projects. Gwangju, Ulsan, and Busan proposed, respectively, ▲ AI-centered industrial convergence complexes ▲ ICT-based future smart cities and floating offshore wind power clusters ▲ win-win smart manufacturing clusters. Additionally, Jeju Island announced active promotion of the renewable energy industry, and Gyeongnam Province emphasized a direction combining the Southeast Mega City and Smart Green New Deal.

[Image source=Yonhap News]

◆Inducing Local Government Participation is Key to New Deal Success... Budget and Execution Management is the Government’s Responsibility= The government presented 'regional balance' as a core pillar of the Korean New Deal because active participation and cooperation of local governments are essential for the successful promotion of related projects. Since about half of the total budget is spent on regional projects based on the projects, without cooperation from local governments as partners, related projects could stop at any time. In fact, regional projects in the Korean New Deal, which is worth 160 trillion won, amount to 75.3 trillion won, about 47.0%.

First, the government plans to link Korean New Deal public contest projects with regional balanced development. For example, when selecting Korean New Deal public contest projects, additional points will be given considering regional development. It will also strengthen links with various special zones and free economic zones. Starting this November, new regulatory free zones focused on New Deal sectors will be designated, and from next year, core strategic industries in New Deal sectors will be selected for each free economic zone.

Support will also be provided for restructuring existing city and provincial main industries into digital and green New Deal-related industries. Along with this, incentives for local investment promotion subsidies, which support up to 34% for facilities and up to 50% for locations for companies investing in local areas, including new or expanded local facilities, relocation of companies from the metropolitan area to local areas, and domestic return of overseas companies, will be increased from the existing 2 percentage points to up to 10 percentage points. The government will exempt local fiscal investment reviews or speed up the process through occasional reviews, and provide differentiated incentives from the National Balanced Development Special Account for excellent cases. Support will also be provided for excess local bond issuance and special grants for national-local cooperation.

However, some point out that as local governments discover and promote projects, there are concerns about budget concentration or project duplication, so appropriate budget management and judgment by the central government are necessary. Professor Kim Tae-gi of Dankook University’s Department of Economics said, "Some local governments may benefit while others may not, which is similar to the government providing preferential support to certain local governments." He also pointed out, "Public enterprises must maintain both publicness and efficiency, but there could be policy confusion during the regional New Deal process." Professor Sung Tae-yoon of Yonsei University’s Department of Economics also said, "The government is likely to be in a controlling position during budget management. It would be problematic if the soundness of regional projects is compromised."

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