Honam Region Business Community: "New Government Must Lead in Attracting Foreign Companies through Infrastructure Improvement"

[Asia Economy Honam Reporting Headquarters Reporter Park Jin-hyung] Although the growth potential of the Honam region has somewhat improved compared to the past, it is still pointed out that it remains at a low level compared to other regions, making it urgent to prepare countermeasures.

The Korea Chamber of Commerce and Industry held the "2nd Regional Economic Forum" on the 7th targeting the Gwangju, Jeonnam, and Jeonbuk areas to review regional economic issues and discuss response tasks.

According to the Regional Growth Potential Index (RGPI) of six regions nationwide presented at the forum, the Honam region rose from 6th place, the lowest in 2015, to 4th place in 2020, but still fell short of the national average.

The Growth Potential Index quantifies growth capacity based on human capital, industrial structure, and other factors within the region. An index above 1 indicates growth capacity above the national average.

The Honam region's index improved from 0.86 in 2015 to 0.95 in 2020, but it remains below 1, raising concerns about growth stagnation.

Kim Young-soo, Senior Research Fellow at the Korea Institute for Industrial Economics and Trade, evaluated at the forum that "the Honam region has contributed significantly to the national economy as a production base for Korea's key industries such as automobiles, petrochemicals, and steel," but pointed out that "recent stagnation in key industries and the lack of concrete achievements in fostering new industries representing Honam have somewhat shrunk the region's growth potential."

In fact, according to the Korea Chamber of Commerce and Industry's analysis of Gross Regional Domestic Product (GRDP) data, the Honam region's share of total GRDP fell from 9.6% in 2010 to 8.9% in 2020. Over the past decade, the regions where GRDP contribution declined include Honam, the Southeast region, and the Daegu-Gyeongbuk region. The gap between the entire southern region and the metropolitan and central regions is widening further.

Local economic circles criticize that government support to overcome this situation is insufficient. Looking at last year's government R&D investment, the amount invested in Gwangju, Jeonnam, and Jeonbuk was 18 trillion won, accounting for only 8.0% of the total 227 trillion won. Although more active government support is needed for regional balanced development, the amount invested in Honam remained below the scale of the regional economy (GRDP share of 8.9%).

Senior Research Fellow Kim Young-soo said, "The stagnation of Honam's growth potential is partly due to inadequate response to industrial structural changes such as the 4th Industrial Revolution, but also due to insufficient government measures to resolve regional imbalance," adding, "To raise the region's growth potential, efforts by regional economic actors must be accompanied by government support and collaboration."

Like other regions dominated by heavy and chemical industries, Honam is also experiencing structural stagnation in existing regional industries concentrated in automobiles, shipbuilding, steel, and petrochemicals. In response, efforts are underway to foster new industries such as artificial intelligence (AI), renewable energy, and biohealth based on 4th Industrial Revolution technologies.

At the forum, Dr. Oh Byung-ki of the Gwangju-Jeonnam Research Institute, who presented the "Honam Region Strategy for Regional Industry Development," proposed building a regional industrial ecosystem through super-regional collaboration as a solution.

In fact, in the Honam region, various initiatives are being discussed, including the "Bitgoeul Mega City" plan involving Gwangju Metropolitan City and five neighboring cities and counties, the "Super-regional Energy Community" seeking collaboration among Gwangju, Jeonnam, and Jeonbuk, and the "South Coast Economic Zone Super-regional Collaboration" encompassing Busan and Ulsan.

Dr. Oh emphasized, "To restore the balance of the national growth axis, which has been tilted toward the metropolitan area and the Gyeongbu axis for over 60 years, various projects that transcend regions and industries must be actively promoted through collaboration among Gwangju, Jeonnam, and Jeonbuk," and added, "Since it is difficult to lead these regional initiatives and efforts to success by local governments and regional companies alone, national-level regional R&D and infrastructure investment must be further activated."

Concerns and advice from the local economic community and experts regarding regional imbalance issues were also voiced.

Choi Jong-man, Executive Vice President of the Gwangju Chamber of Commerce and Industry, representing the Gwangju economic community, said, "Honam is trying to foster new industries by building a wide-area collaborative ecosystem suitable for the 4th Industrial Revolution era, but there are limits to regional efforts alone," and urged, "Especially, despite the urgent need for large-scale government support, much time and effort are consumed improving regional infrastructure due to the preliminary feasibility evaluation method that does not reflect regional realities, so institutional improvement is urgent."

Professor Jang Seok-in of Korea Polytechnic University called for infrastructure improvement and deregulation to attract companies. Professor Jang said, "Despite various government measures for economic development and regional specialized industry promotion in Honam, such as Gwangju's optical industry, Jeonbuk's Carbon Valley, and the Saemangeum project, attracting metropolitan companies, reshoring, and FDI have all been insufficient," adding, "Based on analysis of regional characteristics and existing projects, bold infrastructure investment and innovative regulatory improvements are needed to build an innovation ecosystem where companies can thrive locally."

Woo Tae-hee, Executive Vice President of the Korea Chamber of Commerce and Industry, evaluated, "Honam's industrial base is relatively weak and the regional economy is shrinking, making it difficult to cultivate new growth engines," and urged, "Fortunately, the newly established government has expressed strong will for regional balanced development, so it should prepare extraordinary measures that can practically revitalize the region by gathering opinions from the region and companies."

The forum was attended by Woo Tae-hee, Executive Vice President of the Korea Chamber of Commerce and Industry; Hwang Soo-sung, Director of Industrial Innovation Growth at the Ministry of Trade, Industry and Energy; Jo In-cheol, Deputy Mayor for Culture and Economy of Gwangju City; Choi Jong-man, Executive Vice President of the Gwangju Chamber of Commerce and Industry; Kim Woon-seop, Head of Policy Planning at Gwangju Technopark; Yoo Kyung-min, Head of Industry Activation at the Korea Carbon Industry Promotion Agency; and Hwang Sang-hyun, Head of the Gwangju-Jeonnam Regional Headquarters of the Korea Industrial Complex Corporation.

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