[President Yoon's Inauguration] Industry Expects Improved Business Environment through Deregulation and Support Measures

Urgent Need to Achieve Economies of Scale in New Industries Faster than the US and China
Immediate Reforms Required in New Industry Taxation and Labor Regulations to Secure International Trade Competitiveness
Improve Financial Support Systems for Carbon Reduction Projects to Encourage Investment

On the afternoon of the 9th, one day before the presidential inauguration, officials from the Presidential Transition Committee were making final preparations in front of the Ministry of National Defense building in Yongsan, Seoul, which will be used as the presidential office. President-elect Yoon Seok-yeol plans to use the temporary office on the 5th floor until the 2nd-floor office is completed. Photo by Transition Committee Press Corps

[Asia Economy Reporters Hyunseok Yoo and Chaeseok Moon] With the launch of the Yoon Suk-yeol administration, expectations in the industrial sector are rising. This is because the government announced plans to pursue business-friendly policies even before taking office. The industry has requested the removal of regulations and various support measures to create a 'business-friendly environment.'

At midnight on the 10th, President Yoon Suk-yeol began his term by receiving military command authority at the National Crisis Management Center in the basement of the Yongsan Presidential Office building and receiving a readiness report from the Joint Chiefs of Staff.

Before taking office, President Yoon announced 110 national tasks. In these tasks, he explained, "Growth should be led by the private sector, and the government must clearly distinguish between what it should and should not do," and stated his intention to ease regulations by saying, "The government should design systems and remove regulations so that the market's fairness and efficiency can be trusted, allowing businesses to operate freely."

As a result, expectations in the industrial sector are high. An industry official said, "Many voices from the business community were reflected in the 110 tasks of the transition committee, so expectations are high," adding, "Although there are several challenges remaining in the process, such as bipartisan cooperation, eliminating external uncertainties, and gathering public opinion, if everyone unites with the goal of 'reviving the economy,' it will help improve the business environment."

'Level the tilted playing field'... High expectations for deregulation

Major semiconductor companies such as Samsung Electronics and SK Hynix welcome President Yoon's inauguration. These companies agree that 'full and consistent' support is necessary to survive the global semiconductor supremacy competition. This is interpreted as a request for active efforts to build overall infrastructure, including semiconductor facility investment, research and development, and professional workforce training, which President Yoon has already pledged. A semiconductor industry official said, "Long-term investment is necessary," adding, "Support for professional workforce training, public sector fabs like nanofabs, and ecosystem investments in materials, parts, and equipment must be carried out simultaneously and consistently."

In the automotive industry, a more detailed policy framework is needed. Although the Yoon Suk-yeol administration has stated in its national tasks that it will create a corporate ecosystem to promote the transition to eco-friendly and intelligent mobility, the details are considered insufficient. Professor Kim Pil-su of Daelim University’s Department of Automotive Engineering explained, "Although the 110 national tasks were announced, the vision for future mobility is very weak," adding, "A control tower to comprehensively oversee mobility is missing." The electric vehicle battery industry emphasized the urgent need for R&D tax support. An industry official stressed, "The battery and battery materials industries are directly linked to the 'economic security' promoted by the Yoon administration, so there is great expectation that these industries will be fostered."

The heavy chemical industry, which was labeled as a 'high carbon emitter' sector under the Moon Jae-in administration, is fiercely focused on deregulating new industries and labor-related regulations. A petrochemical industry official raised their voice, saying, "While fostering advanced industries is good, for 'equipment industries' with a high probability of industrial accident fatalities, there should be CEO exemption clauses for punishment under the Serious Accident Punishment Act if they have established excellent safety and health management systems."

Beyond the automotive, chemical, and petrochemical sectors, the industry has many expectations. The aviation industry insists on steady support alongside assistance for the merger of Korean Air and Asiana Airlines. Since COVID-19 is not yet over, government support is necessary until the aviation industry normalizes. Professor Hwang Yong-sik of Sejong University’s Department of Business Administration said, "If Korean Air and Asiana Airlines merge, they will have the opportunity to leap forward as a global airline," adding, "I hope the government takes a proactive stance in corporate merger reviews and acts as a problem solver." He also added, "Support is needed only until the aviation industry returns to normal."

The shipping industry calls for policy support for new revenue sources. An industry official said, "Some companies are preparing to compete in comprehensive logistics businesses, so policy support or direction is needed," adding, "The industry commonly needs to prepare for environmental regulations, and government-led development of next-generation fuels and ships is necessary."

The IT industry shares similar views. The portal industry, recently identified as a top regulatory target of the next government due to issues like news editing and arrangement, hopes to minimize discrimination against foreign companies. A portal industry official said, "IT regulations have often focused only on domestic companies, so we hope efforts will be made to prevent fairness issues or reverse discrimination."

The telecommunications industry has requested that industry opinions be actively reflected in tariff policy formulation. A telecom official said, "Considering ongoing 5G network investments and the likelihood of accelerated 6G investments, consultation with the industry is necessary when formulating policies," adding, "Especially when setting mid-tier tariffs and other telecom fee policies, industry opinions should be gathered." Regarding the government's OTT integration policy, the official requested reconsideration, saying, "Integration among companies is difficult because their goals and directions differ."

[Image source=Yonhap News]

Agreement on direction but mixed feelings on feasibility

Regarding the Yoon Suk-yeol administration's economic policies, some respond that while they agree with the direction, the feasibility remains uncertain. There is a strong voice that the government should secure 'economies of scale' in new industries faster than the US and China by '2025.' This is the year when the United States-Mexico-Canada Agreement (USMCA), which grants tariff-free benefits only if more than 75% of finished vehicle parts are sourced locally in the US, comes into effect.

The industry unanimously emphasized the need to enhance international trade competitiveness. A steel industry official said, "The US has reached import tariff agreements with the European Union (EU), Japan, and others, and President Joe Biden has recommended using only US-made steel for domestic infrastructure construction, so warning lights are on for trade competitiveness with the US, requiring continuous government negotiation efforts."

There are also criticisms that the financial support system for carbon-neutral projects is insufficient. With benchmark interest rates rising sharply, there are concerns about investment contraction, but there is no clear standard to include corporate carbon reduction projects as eligible for financial support, reducing investment incentives.

An industry official said, "While government policies prioritize fostering 'eco-friendly, ESG (environment, social, governance), and future industries,' the government and policy banks seem to regard high carbon-emitting industries like cement, aluminum, and steel as sunset industries," adding, "It is becoming difficult to receive financial benefits unless businesses transition to materials, hydrogen, electric vehicles, etc." He continued, "Financial support for foundational industries must continue under the new government," and said, "Since past environmental investments are being excluded from financial support, we hope a system will be established for the financial sector to recognize these as 'environmental investments.'"

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