Approval for Business Restructuring of 23 Companies Including Construction Equipment Digital Integration... "2,100 New Jobs in 5 Years"

28th Business Restructuring Plan Deliberation Committee Meeting
Approval of 4th Industrial Revolution and Future Car Transition
Over 2,100 Jobs and 3.1 Trillion KRW Investment Over 5 Years
Record 57 Companies Approved in 2020
Strengthened Tax, Funding, and R&D in 2021

Park Jin-gyu, Vice Minister of the Ministry of Trade, Industry and Energy, delivering a congratulatory speech at the '15th Electronics and IT Day' held on the 10th at the COEX Conference Hall in Samseong-dong, Seoul. (Photo by Yonhap News)

[Asia Economy Reporter Moon Chaeseok] New industry plans have been approved, including a project linking construction equipment to a real-time manufacturing database (DB) and a social welfare service project connecting kimchi refrigerators to artificial intelligence (AI).

On the 28th, the Ministry of Trade, Industry and Energy announced that it approved the business restructuring plans of 23 companies through the '28th Business Restructuring Plan Deliberation Committee.'

The committee consists of 20 business restructuring experts such as professors, lawyers, and accountants. Park Jin-gyu, Vice Minister of the Ministry of Trade, Industry and Energy, and Professor Lee Hong of Kwangwoon University serve as co-chairmen.

Embedding DB in Excavators and AI in Kimchi Refrigerators

Source: Ministry of Trade, Industry and Energy

The construction machinery equipment businesses of four companies, including Daemo Engineering, will be transformed into real-time manufacturing DB linkage projects. The home appliance businesses of four companies, including Winia Dimchae, will be upgraded to AI-based safety care projects linked to social welfare services.

This is the content of the 'manufacturing digital transformation' business restructuring plans approved by the committee for eight companies on that day.

The committee also approved the transition of 10 internal combustion engine auto parts companies to electric and hydrogen vehicle parts companies, the transition of two companies from LCD to next-generation displays, and the restructuring of three other businesses.

The 23 companies approved for business restructuring on this day plan to enter new industry fields through approximately 2,100 new jobs and KRW 3.1 trillion in new investments over the five-year restructuring period.

Previously, the committee approved the transition from internal combustion vehicles to future vehicles at the 26th meeting in June and the transition of LCDs to next-generation displays for companies such as Samsung Display at the 27th meeting in September.

An official from the Ministry of Trade, Industry and Energy explained, "The unprecedented COVID-19 crisis has highlighted the importance of the online and contactless economy. We are actively promoting the transition to a digital innovation economy through the Korean New Deal and other initiatives to meet new era demands."

"Tax system reform to be promoted in 2021... easing deferral of capital gains tax on asset sales"

Source: Ministry of Trade, Industry and Energy

The Ministry of Trade, Industry and Energy announced that it approved business restructuring for a record 57 companies this year, the highest since the introduction of the Corporate Vitality Act in 2016. Two large companies, including Samsung, received approval, marking the first large company approvals in three years since 2017.

By industry, auto parts companies were the most numerous with 22 companies. From 2016 to 2019, there were only two companies, so this is an elevenfold increase this year. An official from the ministry explained, "Since June, we have actively promoted business restructuring in the auto parts industrial ecosystem, which is analyzed as a result of the spread of restructuring movements in the industry."

Next year, the ministry plans to jointly expand business restructuring incentives with related ministries.

As announced in the economic policy direction on the 17th, three types of incentives to activate restructuring between demand and supply companies, tax system reforms to support restructuring implementation, and support for facility replacement through strengthening the role of Korea Asset Management Corporation (KAMCO) will be promoted.

Specifically, the three incentives include ▲ easing the conditions for deferral of capital gains tax on asset sales ▲ priority support for R&D and funds dedicated to restructuring ▲ and parallel policy financial support linked to the 'Innovative Companies National Representative 1000' program.

Additionally, the debt ratio requirements applied during deferral of capital gains tax will be relaxed, and the scope of registration and license tax reductions will be rationalized.

Furthermore, next year, a KRW 10 billion R&D support project exclusively for companies approved for restructuring and an KRW 1.8 billion commercialization support project will be newly launched. A restructuring support fund of KRW 20 billion plus alpha is planned to be established.

Vice Minister Park said, "Based on the strengthened business restructuring system, we plan to fully support digital and eco-friendly transition restructuring to promote the Korean New Deal and carbon-neutral industrial innovation, which are the core directions of next year's economic policy."

He emphasized, "We will continuously expand the base of business restructuring by closely establishing cooperative systems with related organizations by region, industry, and function."