[Shaken K-Automotive]③ Chairman Jung Daejin: "Including Electric Vehicles in Domestic Production Incentive Tax System Will Strengthen the Industry Ecosystem"

Interview with Jung Daejin, Chairman of the Korea Automobile Mobility Industry Association

"Requesting a Corporate Tax Deduction Proportional to Sales Volume"

"The Ultimate Benefit Goes to Consumers... It's a Misunderstanding That Only Compa

The automobile industry is insisting that environmentally friendly vehicles should be included as eligible items for the domestic production promotion tax system the government is seeking to introduce. This is due to concerns about weakening competitiveness of domestically produced vehicles, amid the influx of cheap Chinese electric cars and the strengthening of global protectionism. On May 6, The Asia Business Daily interviewed Jung Daejin, Chairman of the Korea Automobile Mobility Industry Association (KAMA), at the Automobile Hall in Seocho-gu, Seoul, to hear his thoughts on the importance of introducing the production tax system. In the area in front of his office, several miniature models of vehicles produced by domestic car manufacturers were on display. This highlighted both KAMA and Chairman Jung’s deep affection for the domestic automobile industry.

Jaejin Jung, Chairman of the Korea Automobile Mobility Industry Association, is posing in front of domestic automobile manufacturers' logos after an interview with The Asia Business Daily. Photo by Dongjoo Yoon

Chairman Jung emphasized, "Through tax incentives, we can stably maintain the entire supply chain—from batteries to parts to finished vehicles—within Korea," adding that the list of items eligible for the domestic production promotion tax system should be proactively reviewed.

He continued, "We can provide stable volumes to over 20,000 partner parts suppliers, supporting their continued presence and electrification transition in Korea." He added, "The added value and jobs created in related upstream and downstream industries will help revitalize the national economy, improve fiscal soundness, and activate local economies by enhancing operational rates and investment conditions at regional production bases."

When asked about the atmosphere in the National Assembly regarding the production tax system, he said, "It's extremely heated. More than 10 amendments to the Restriction of Special Taxation Act that include the production promotion tax system have been proposed. The government plans to prepare its own proposal for discussion by July, and related work is underway." However, he noted, "While investment tax credits have been granted in the past, the idea of providing tax credits at the production stage is very unfamiliar, so the tax authorities are grappling with how to design it."

Chairman Jung elaborated, "Specifically, we are talking about a system where tax reductions would be given when domestically produced electric vehicles, hydrogen vehicles, and plug-in hybrids are sold domestically." He added, "In Japan, it appears that they provide a fixed subsidy of about 4 million won for every environmentally friendly car sold, but since we have little experience with fixed subsidies, the authorities seem to be considering various options."

Regarding concerns that granting tax credits to large corporations could lead to a shortfall in tax revenues, he responded, "That's a huge misconception. Other countries are all taking measures to prevent Chinese electric and autonomous vehicles from encroaching on their markets, but we are the only ones left unprotected." He added, "Parts suppliers can also overcome their difficulties, and consumers will benefit as well, so it is inaccurate to see this as a benefit only for finished vehicle manufacturers." He concluded, "This is an essential measure to promote production throughout the entire automobile industrial ecosystem and to attract domestic production infrastructure."

Jung Daejin, Chairman of the Korea Automobile Mobility Industry Association, is giving an interview to The Asia Business Daily. Photo by Yoon Dongju

At a time when Korea's autonomous driving technology is lagging behind the United States and China, Chairman Jung argued that policy support is needed. "In the United States, about 4,000 unmanned autonomous vehicles are operating commercially in 10 cities, and in China, about 3,000 are in operation in 22 cities. In Korea, only 132 Level 3 vehicles are in use, so the technology gap is widening rapidly," he said. "It was a good move for the government to announce a roadmap to commercialize Level 4 autonomous driving by 2027 and introduce autonomous public transportation by 2030; now, the key is execution."

Jaejin Jung, Chairman of the Korea Automobile Mobility Industry Association, is giving an interview to The Asia Business Daily. Photo by Dongju Yoon

He then made three requests to the government to bridge the technology gap in autonomous driving. "First, there must be sufficient budget support. An autonomous bus costs between 800 million and 1.2 billion won, which is three to four times more than a regular electric bus (about 300 million won)," he said. "It is realistically impossible for transport operators to make the switch on their own. Just like electric vehicle subsidies, conversion targets should be specified in numbers, and the state should provide financial support for the cost difference." He also said, "Since it is unclear whether the manufacturer, the driver, or the software company is responsible in the event of an accident, a clear liability system must be established in law as soon as possible." He further suggested, "The shift to software-defined vehicles (SDV) hinges on securing software talent, but there is an absolute shortage of skilled professionals, so concentrated support is needed."

About Chairman Jung Daejin of KAMA

Chairman Jung graduated from the Department of Economics and the Graduate School of Public Administration at Seoul National University. He then passed the 37th higher civil service examination and joined the Ministry of Commerce and Industry. He later served as Senior Administrator at the Presidential Secretariat for Industry, Director General of the Creative Industry Bureau at the Ministry of Trade, Industry and Energy, and Deputy Minister for Trade at the Ministry of Trade, Industry and Energy. Since March, he has been serving as Chairman of the Korea Automobile Mobility Industry Association (KAMA). 

Dialogue by: Oh Hyungil, Deputy Director of the Industry Department

Compiled by: Choi Youngchan, Reporter

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