Digital Transformation Accelerates in Small and Medium Manufacturing Industries

Minister Lee Young, Ministry of SMEs and Startups. [Photo by Yonhap News]

[Asia Economy Reporter Donghyun Choi] A legal basis has been established to support the digital transformation of small and medium-sized manufacturing enterprises.

The Ministry of SMEs and Startups announced that the bill for the "Act on the Promotion of Smart Manufacturing Innovation for Small and Medium Enterprises" passed the Cabinet meeting on the 27th.

So far, small and medium manufacturing enterprises have shown various achievements, including productivity improvement and work environment enhancement, through the establishment of smart factories. From 2014 to 2019, over 10,200 small and medium enterprises that introduced smart factories experienced effects such as productivity increase (29.4%), quality improvement (42.8%), and cost reduction (15.9%). However, the legal basis was somewhat insufficient to stably promote digital transformation policies such as the establishment and operation of manufacturing data platforms. With the enactment of the Smart Manufacturing Innovation Act, a legal foundation has been established to stably promote smart factory construction projects and build a manufacturing innovation ecosystem based on data.

The main contents of the Smart Manufacturing Innovation Act include establishing a policy promotion system for the digital transformation of small and medium manufacturing industries, stipulating detailed support policies such as smart factory construction, and matters related to policy implementation including sanctions against fraudulent actors. It also stipulates the establishment of a basic plan for smart manufacturing innovation, designation of promotion agencies, conducting surveys and compiling statistics, management and supervision of promotion and specialized agencies, sanctions against fraudulent institutions, delegation and consignment of authority, and other management matters.

The Smart Manufacturing Innovation Act differs in policy targets and content from the "Act on the Promotion of Industrial Digital Transformation," which is under the jurisdiction of the Ministry of Trade, Industry and Energy. While the Industrial Digital Transformation Promotion Act is a bill that induces digital transformation across the entire industry, the Smart Manufacturing Innovation Act focuses on small and medium enterprises lacking digital capabilities. The Ministry of SMEs and Startups expressed expectations, stating that a bill tailored to support small and medium enterprises has been prepared this time.

Minister Lee Young of the Ministry of SMEs and Startups said, "The Smart Manufacturing Innovation Act will be promulgated on January 3 next year, and after the enactment of the enforcement decree concerning the designated smart manufacturing innovation promotion agencies and support for manufacturing data utilization, which are delegated by the law, it will be enforced six months after promulgation. We hope that this bill's enactment will create a stable policy environment for small and medium enterprises' smart manufacturing innovation."

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