Hong Nam-ki "7 Trillion Won Investment in Service R&D Over 5 Years... Strategy to Secure Future Car Market" (Comprehensive)

"Q3 GDP Growth of 1.9% Encouraging... COVID-19 Resurgence Painful"

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the 4th Innovation Growth Strategy Meeting and the 39th Economic Ministers' Meeting held at the Government Seoul Office on the 27th.

[Asia Economy Reporter Kwangho Lee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated on the 27th, "The government will significantly expand its service R&D investment from 4 trillion won over the past five years to 7 trillion won over the next five years."

At the 4th Innovation Growth Strategy Meeting and the 39th Economic Ministers' Meeting held at the Government Seoul Office Building on the same day, Deputy Prime Minister Hong said, "We will promote the activation of service R&D as one of the core tasks amid the wave of transformation such as non-face-to-face innovation and digital transition caused by the COVID-19 pandemic."

He emphasized, "To establish a self-sustaining service R&D ecosystem in the private sector, we will actively consider adding innovative core technologies in the service sector to the tax credit targets for new growth and core technology R&D, and including research and development software in the integrated investment tax credit target."

He added, "We will also support the operation of a matching system so that companies lacking their own R&D capabilities can actively utilize research and development service companies."

During the meeting, three major innovation plans for the public contract system were also discussed. Deputy Prime Minister Hong explained, "Since May, we have operated a joint public-private contract system innovation task force (TF), which has set three major innovation directions: supporting innovation and new industries, establishing a fair contract culture, and enhancing flexibility and efficiency of the contract system. Based on these, a total of 45 improvement measures have been prepared."

He continued, "We will expand the exemption scope for the use of innovative products from contract officers to contractors, exempting responsibility for contract delays that may arise from the use of innovative products," and "We plan to prohibit the abuse of superior position by ordering agencies to unfairly transfer costs or obligations to contractors and expand contract dispute mediation targets that can protect the rights of contracting parties without litigation procedures."

Furthermore, he said, "We have introduced a catalog contract system that allows flexible addition of goods and services and price changes through an electronic catalog," and added, "Considering recent economic conditions, we will also promote improvements to the overall operation system of the small-amount direct contract system, such as raising the amount criteria for small-amount direct contracts."

The government plans to immediately revise tasks that can be implemented through contract regulations or detailed standards of the Public Procurement Service by the end of the year without legal amendments, and to amend the National Contract Act for tasks requiring legal revision by the first half of next year.

The government also plans to announce future car measures soon. Deputy Prime Minister Hong said, "To swiftly transition to the future car era and secure global market leadership, we will discuss and finalize strategies for the spread and market dominance of future automobiles as soon as possible."

He added, "Future cars are a field where people can experience a major change comparable to the advent of smartphones in daily life," and "It is expected to create multifaceted effects economically, such as expanding employment and exports and fostering new upstream and downstream industries."

Regarding the preliminary GDP growth rate of 1.9% for the third quarter announced that day, Deputy Prime Minister Hong evaluated, "There are both encouraging and painful aspects."

He analyzed, "Growth rebounded significantly centered on exports, entering a recovery trajectory for economic normalization," but "the resurgence of COVID-19 in August constrained the improvement trend in domestic demand seen in June and July, limiting the extent of growth rebound."

Exports have improved due to the recovery of major economies and strong exports of IT products. The contribution of export growth expanded from -6.5% in the second quarter to 5.5% in the third quarter, and the average daily export amount from October 1 to 20 was $2.1 billion, up from $1.65 billion in the second quarter.

On the other hand, private consumption acted as a factor lowering the growth rate by 0.5 percentage points due to sluggish face-to-face service consumption. It is judged that if the consumption recovery trend of the second quarter had continued without a COVID-19 resurgence, growth in the third quarter could have reached the mid-2% range.

In the fourth quarter, the easing of level 1 quarantine measures is expected to continue the domestic demand-centered economic improvement trend, but uncertainties remain due to the spread of COVID-19 in Europe, the U.S. presidential election, and U.S.-China conflicts.

The government plans to support economic improvement through domestic demand stimulation and export support along with quarantine responses during the remaining period.

Deputy Prime Minister Hong emphasized, "We will actively promote domestic demand revitalization packages such as resuming the issuance of consumption coupons, Korea Sale Festa, and Christmas market events, and strengthen online export support so that export companies can actively utilize large overseas shopping events in October and November," and added, "We will prepare measures to enhance fiscal expenditure execution with the mindset that minimizing year-end budget leftovers is like a fifth supplementary budget."

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