"South Korea Should Foster Companies Like 'SpaceX'"

STEPI Research Fellow An Hyeongjun, "We Must Shift to a Public-Private Cooperation System, Not Government-Led"

SpaceX

[Asia Economy Reporter Kim Bong-su] With the advent of the 'New Space' era, where the private space industry is becoming active, there are calls for South Korea to improve its space development projects from the current government-led and private contract system to a public-private partnership model, similar to leading space development countries. Just as NASA recently placed an entire order for a lunar lander with SpaceX, the government should save costs and accelerate schedules, while private companies should be able to establish a stable business foundation through securing profits and technology.

Researcher An Hyeong-jun of the Science and Technology Policy Institute (STEPI) proposed this institutional improvement direction in a report published in the recent 'STEPI Insight' No. 273.

According to Researcher An, as space development shifts from government-led to private-led in countries such as the United States, Japan, and Europe, South Korea is also expected to expand private companies' participation in space launch vehicles, satellites, and the Korean Satellite Navigation System, following the recent abolition of missile guidelines at the South Korea-US summit and South Korea-US space development cooperation. In particular, major countries are attempting various forms of public-private cooperation in space development as a means to transition from government-led to private-led space development, and it is now time for South Korea to consider public-private partnerships.

Especially, major overseas countries promote public-private cooperation that satisfies both companies and governments based on specific business contracts that guarantee companies' investment recovery and share risks and roles in space sector development. The government pursues cost savings and schedule efficiency, while companies secure competitive advantages in the market through profit generation and accumulation of technical capabilities. Representative cases include NASA’s utilization of private space companies, France’s COD3 contract flexibility approach, and Japan’s JAXA consortium formation for the entire development cycle involving public and private sectors.

On the other hand, in South Korea, since the launch of UriByul-1 in the 1990s, most space development projects have been led by the government (Korea Aerospace Research Institute), with private companies participating only in a limited capacity by winning contracts. Although there have been some achievements, there have been limitations in enabling private companies to accumulate systematic integration capabilities and to motivate investment in technological innovation or market development.

Accordingly, the government has been gradually transitioning to a private-led public-private partnership model through the Next-Generation Medium Satellite Development Project, which launched its first satellite in March. However, there are many institutional limitations, such as low incentives for private companies to participate as lead institutions in national R&D projects, and discrepancies between domestic industry realities and government policies, including mandatory application of domestic parts localization rates.

Researcher An proposed the following policy tasks to improve this: ▲transform companies from ‘policy beneficiaries’ to ‘innovation investment partners’ ▲institutional improvements to strengthen companies’ motivation to participate in public-private cooperation ▲strengthening the role of public-private cooperation hub institutions in the space sector ▲activating human resource exchanges between public and private sectors and establishing cooperation channels.

Researcher An said, “To transition to private-led space development, the government must recognize companies not as recipients of technology transfer but as investment partners,” adding, “From the perspective of market activation, it is necessary to establish an institutional foundation that allows private companies to recover investments through a certain proportion of investment in space development and exclusive use of satellite operation or satellite data.”