The government will select industries for the "5 hubs, 3 special regional growth engines" by Feb. next year and move to provide tailored support that combines large-scale fiscal injections, preferential policy finance, and regulatory exemptions. In particular, it plans to prioritize 40% of the investment from the 150 trillion won Public Growth Fund for the growth engine industries.
"5 hubs, 3 special" is a strategy to divide the nation into five broad regions and three special regions and foster core growth engines to boost each region's industrial competitiveness. The idea is to ease the single-capital-area-centric system and shift regions into drivers of economic growth.
On the 17th at the Government Sejong Convention Center, the Ministry of Trade and Industry (MOTI) unveiled three policy directions under the vision "growth for regions, vitality for corporations" at a joint ministry policy briefing: ▲ region-centered economic growth ▲ an advanced manufacturing artificial intelligence (AI) grand transition ▲ a new trade strategy.
◇ Industry minister: "Turn regions into growth bases like the capital area"
Minister Kim Jung-kwan of the Ministry of Trade and Industry (MOTI) said in the briefing, "Regional economies are not a matter of choice but the key to South Korea's growth," and added, "We will focus policy capacity on regional growth to cultivate regions into growth bases like the capital area."
The Ministry of Trade and Industry (MOTI) plans to concentrate all-of-government "growth five-piece package" support on the finalized 5 hubs, 3 special growth engine industries. It will expand regulatory free zones by region to provide regulatory exemptions for demonstrations of new technologies such as urban driving of future cars, and establish a tailored talent supply system centered on nine regional flagship national universities.
To induce large-scale regional investment by corporations, it will consider introducing a "growth engine special grant" and will prioritize investing more than 40% of the 150 trillion won Public Growth Fund into growth engine industries. It also plans to create a dedicated 200 billion won research and development (R&D) program to build a region-led industrial ecosystem.
Fostering advanced industries by mega-region linked to the 5 hubs, 3 special strategy will also get underway in earnest. It will build a "southern semiconductor innovation belt" to extend the capital-area semiconductor ecosystem to Gwangju, Gumi, and Busan, and form region-specific specialized clusters for advanced packaging, Power Semiconductor, materials, and parts. To build a "battery triangle belt" connecting Chungcheong, Honam, and Yeongnam, it will newly designate a specialized complex for producing basic battery raw materials in the second half of next year.
◇ Build 500 AI factories by 2030… restructure organizations with a focus on industrial security and AI
The core of the industrial innovation strategy is "Manufacturing AI Grand Transition (M.AX)," which combines manufacturing and AI. The Ministry of Trade and Industry (MOTI) plans to build 500 AI factories by 2030 and expand cooperative AI leading models for large and small firms and AI demonstration industrial complexes nationwide.
The Ministry of Trade and Industry (MOTI) also revealed key directions for the new trade strategy. It will actively consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and seek to conclude the Korea-China services and investment free trade agreement (FTA) to diversify export markets.
It also announced organizational restructuring plans to back these policies. It will create a new "Office for Industrial and Resource Security" to respond to risks in industrial and resource supply chains, and establish an "Industrial AI Bureau" dedicated to the manufacturing AI transition. It also plans to build an organization for Korea-U.S. trade cooperation dedicated to managing trade with and investment in the United States.
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