The government is establishing a support system to meet the growing maintenance, repair, and overhaul (MRO) demand in the United States. In the first quarter of this year, it plans to create a Korea-U.S. cooperation package that includes collaboration in the fields of naval and merchant vessels and the promotion of personnel exchanges.
To maintain the competitive edge in the semiconductor sector, which is a key industry in Korea, support to corporations will increase. The tax credit rate for national strategic technology investments by semiconductor corporations will be raised by 5 percentage points compared to the current rate.
Faced with a crisis due to increased production in China, the petrochemical sector plans to institutionalize the "private-public joint petrochemical industry council" to pursue business restructuring and transition to eco-friendly and high-value-added businesses. A support system for the rapid business restructuring of corporations will be established. The government will first promote a consulting service project early this year to outline industry restructuring directions autonomously, and based on the results, it plans to prepare additional support measures for the petrochemical industry in the first half.
◇ Sankyongjang conference revamped as private-public industry policy control tower
On the 2nd, the government confirmed and announced the "2025 Economic Policy Direction" during a meeting led by Acting Deputy Prime Minister and Minister of Strategy and Finance Choi Sang-mok.
Amid expectations of a domestic economy slump and growing global trade uncertainties, the government has carefully included industrial competitiveness enhancement measures in this economic policy direction. First, the government decided to expand and reorganize the industrial competitiveness enhancement ministers’ meeting (Sankyongjang conference) into a private-public sector industry policy control tower.
At the Sankyongjang conference, industry issues and structural improvement tasks will be identified on a two-track basis. Using a "top-down" approach, overseas industry policies will be analyzed to identify proactive tasks for our industry, and with a "bottom-up" approach, immediate issues will be received through various meetings to derive improvement plans.
Support tailored to each industry will be strengthened. For semiconductors, a key industry in Korea, ecosystem support will be accelerated with the goal of "securing strategic dominance." Support will be provided for enacting a special semiconductor law pending in the National Assembly and will specifically pursue financial and tax support measures for infrastructure and research and development (R&D).
For the semiconductor cluster in Yongin and Pyeongtaek, which aims to be completed by 2032, the government will support more than half of the corporation's share of the expense for the underground transmission line, estimated at 1.8 trillion won. The infrastructure support limit for specialized complexes will also be raised from the current 50 billion won.
The tax credit rate for national strategic technology investments for semiconductor corporations will be increased by 5 percentage points compared to the current rate. Under the Restriction of Special Taxation Act, when eligible for a national strategic technology tax credit, large and medium-sized corporations receive a 15% tax credit on commercialization facility investments, and small corporations receive 25%. The government plans to expand the credit rate for the semiconductor national strategic technology field to 20% for large and medium-sized corporations and 30% for small corporations.
Low-interest loans will also be provided for the semiconductor sector. A 4.25 trillion won program for low-interest loans from the Industrial Bank of Korea will be established at a minimum of 2% in line with treasury bond rates.
◇ Consulting for petrochemical industry restructuring in early year... strengthening response for secondary batteries and steel trade
The petrochemical sector will pursue business structure reforms led by corporations, with the government actively assisting in necessary areas. Initially, the government will operate a permanent private-public joint council for the restructuring of the petrochemical industry early in the year and discuss competitiveness enhancement plans such as business restructuring and high-value business transition.
The petrochemical industry will conduct consulting services for industry restructuring directions early in the year. Based on these results, the government plans to prepare additional support measures for the petrochemical industry by the first half. If regional economies are affected during the industrial restructuring process, the government plans to quickly designate "industrial crisis preemptive response areas" to prevent local economies from shrinking.
In the shipbuilding sector, with U.S. President-elect Donald Trump showing interest, plans to establish an MRO cooperation framework have been put forward to create a new blue ocean. By strengthening cooperation in the fields of naval and merchant vessel as well as sharing smart yard technology, the "Korea-U.S. cooperation package" will be prepared in the first quarter. Support will also be provided for eco-friendly ship R&D and the establishment of smart manufacturing bases. In particular, digital transformation technology dissemination and training for current workers will be supported for small and medium-sized shipbuilders.
For secondary batteries, with increased uncertainty following the launch of the Trump administration's second term, such as the reduction of benefits under the "Inflation Reduction Act" (IRA), a "system to respond to U.S. trade relations" will be established to minimize these uncertainties. Policy finance will be expanded to support the next-generation battery development and entry into new markets for secondary battery corporations. Utilizing the supply chain stabilization fund, internalization of battery materials and minerals and diversification of import sources will also be pursued.
For steel, measures to address unfair trade practices will be strengthened in response to the reappearance of the Trump administration, which introduced the "quota system." If additional export regulations occur, the government plans to operate private-public councils to analyze impacts by item and establish strategies for each scenario. Additionally, active responses such as strengthening anti-dumping investigations will be made against the dumping of Chinese steel. Efforts to secure steel competitiveness will also continue, with plans to launch R&D for the development of high-value special steels and to establish a demonstration center by 2028 for the digital transformation of small and medium-sized steel corporations.
◇ AI·bio·quantum, securing future growth items... expanding planned regulatory sandboxes from 2 to 8
Support for three promising advanced industries, including artificial intelligence (AI), bio, and quantum, will also be reinforced.
For AI, a national AI computing center will be established, and in the first quarter, a comprehensive "AI computing infrastructure policy" will be developed, including data center regulatory improvements. Follow-up measures will be swiftly implemented to ensure the smooth integration of the Basic AI Law into the market, and systematic and coherent legal framework adjustments will be made.
In the bio sector, the "AI-Based Bio Innovation Strategy" for cultivating digital bio and Korean Biohealth Cluster Innovation Strategy will be prepared and announced in the first half.
In the quantum sector, the private-public joint quantum strategy committee will be launched, with a five-year comprehensive plan to be announced in the latter half. A flagship R&D project will be pursued to secure core quantum technologies, and efforts will be made to commercialize quantum sensors and domesticate materials and parts.
Facility funds to promote corporate investment will be supplied at an unprecedented scale. The policy finance of 52 trillion won provided last year has been increased by 3 trillion won to 55 trillion won this year.
To boost facility investment, the increased tax credit rate for investment increments will be made permanent. Additionally, a temporary investment tax credit will be proposed for small and medium-sized corporations this year. For facilities invested in by small corporations this year, an accelerated depreciation special case will be applied to reduce their investment burden. Accelerated depreciation is a system that provides a significant early depreciation of assets acquired to defer corporate tax liability and allows for the early recovery of investment costs required for asset acquisition.
The on-site regulatory innovation process will also be enhanced. The number of planned regulatory sandboxes currently operating will be significantly expanded from 2 to 8. Currently, the planned regulatory sandboxes are applied to industrial convergence and the ICT sector, but the government plans to add innovative finance, regulatory free zones, smart cities, research and development (R&D) special zones, mobility, and the circular economy.