Why Did the 'Chegangsoguk' Luxembourg Choose 'Space'? [Reading Science]

Marking Space Resource Development as the Next-Generation Growth Engine
Focused Investment and Corporate Attraction Since 2016, Establishing Institutional Foundations
KARI: "Attention on Whether Communication Satellite Operator SES's Success Story Will Be Repeated"

Apollo 16 Moon landing photo. Source=NASA (National Aeronautics and Space Administration)

[Asia Economy Reporter Kim Bong-su] Luxembourg, a small country twice the size of Jeju Island with a population of 640,000. However, its GDP per capita exceeds an astonishing $130,000, making it one of the wealthiest countries in the world. Originally renowned for having one of the world’s highest levels of freedom for corporate activities, this small nation has recently identified 'space' as its next growth engine. Through active national space development policies, deregulation, and institutional reforms, it is emerging as a hub for space industries such as asteroid mining. Why has Luxembourg gone 'all-in' on the space industry?

◇ "First come, first served" legal guarantees

According to the 'Space Policy Research' report by the Korea Aerospace Research Institute (KARI) on the 24th, Luxembourg was originally an industrial country based on the steel industry, but faced a crisis after the 1970s oil shocks and resource depletion led to the decline of steel production. In response, Luxembourg focused all efforts on attracting foreign companies and fostering service industries such as insurance, banking, and telecommunications. It actively embraced European Union (EU) policies to attract foreign companies seeking to enter Europe, while implementing policies such as low tax burdens (capital gains tax exemption for holdings over six months), free capital transactions, and confidentiality of financial transactions. It ranked first in corporate activity openness by a U.S. media outlet and third as the optimal location for corporate headquarters, demonstrating its proactive stance in attracting companies and capital. Additionally, its proximity to Belgium, France, and Germany provided a rich pool of knowledge workers.

Luxembourg is now actively nurturing the 'space exploration' industry as its next growth engine. It began space development by establishing the telecommunications satellite operator SES in 1985 and joined the European Space Agency (ESA) as the 17th member in 2005. Notably, its space budget in 2020 nearly doubled from the previous year to 193 million euros (approximately 300 billion KRW). The government’s space sector expenditure increased nearly tenfold from 0.03% of GDP in 2016 to 0.26% in 2020.

While previously focusing on satellites, Luxembourg has shifted its attention to the 'space resource economy' sector since 2016. Through the 'SpaceResources.lu' initiative, it aims to attract companies with space resource research and technological capabilities to become a hub for space development. To this end, Luxembourg became the second country in the world, after the U.S. in 2017, to enact the 'Law on the Exploration and Use of Space Resources,' establishing a legal framework that recognizes ownership rights for companies or individuals who first discover resources. Judging that private investment in space is necessary, the country is creating infrastructure at the national level, including the establishment of the 'Luxembourg Space Fund' with an initial scale of about 100 million euros.

◇ Aiming to replicate the 'big hit' of telecommunications satellite operations

Luxembourg’s active engagement in space development is primarily because it sees significant investment value. The Luxembourg Space Agency’s 2018 analysis of the socio-economic effects of space resource utilization predicted that the space resource industry would experience rapid growth, generating revenues of approximately 73 billion to 170 billion euros from 2018 to 2045. During the same period, it is expected to create up to 1.8 million jobs and produce ripple effects in related fields such as data analysis, material science, and robotics. To efficiently explore and utilize space resources, Luxembourg is pursuing international cooperation with countries including China, the United Arab Emirates, Belgium, and Japan.

This space industry development policy was modeled after SES, which grew into a global telecommunications satellite operator. SES does not own or launch any satellites itself but has become a hugely successful company, accounting for 50% of the global telecommunications satellite industry revenue. It provides services to approximately 300 million households with 8,000 broadcast channels, as well as communication services for aircraft and ships, dominating the industry. Luxembourg is actively investing in foreign companies with space technology capabilities and aggressively attracting headquarters and research centers to replicate SES’s success in the space resource sector.

The report noted, "Luxembourg provides legal stability to space companies by resolving potential legal and institutional issues and is accelerating normative and policy international cooperation with various countries to establish international standards." It added, "It will be worth watching whether a global space resource mining company like SES will emerge from Luxembourg in 20 to 30 years."