[Advanced Industry Development] "Each Country Is a Battlefield"... Yoon Government Enters Protracted War

Yoon Expresses Strong Commitment to Semiconductors, Space, and Bio Through Previous Pledges
Aims to Attract Private and Global Investment... Positive Impact Expected from K-Chips Act

The advanced industry promotion plan announced by the government on the 15th is based on the industrial pledges President Yoon made during the presidential election campaign. President Yoon promised to nurture semiconductors, space, bio, and other sectors as national strategic industries by establishing a government-wide control tower, easing regulations, and providing tax support. During the election campaign, he also toured the country, announcing the designation of national industrial complexes. The industrial sectors of the 15 new project sites announced by the government on this day?semiconductors, space, bio, future cars, nuclear power, etc.?reflect President Yoon's pledges. A presidential office official explained, "The president's intention is to change the existing economic ecosystem that relied solely on manufacturing and simple export structures and to fundamentally strengthen the nation's competitiveness," adding, "The goal is not just to create project sites but also to attract private and global investments together."

The reason President Yoon stated at the 14th Emergency Economic and Livelihood Meeting held at the Blue House State Guest House on the same day that "advanced industries are directly connected to people's livelihoods" is that he is fully committed to supporting the promotion of advanced industries. About a month after urging semiconductor material manufacturers to "join forces between the government and companies to foster advanced industries as an economic pillar and a national security asset" in early last month, the Ministry of Trade, Industry and Energy and the Ministry of Land, Infrastructure and Transport, the relevant ministries, announced plans to establish national advanced industrial complexes, reflecting the same context.

On this day, President Yoon likened the advanced industry strategies of various countries to a "battlefield" and emphasized the necessity of tax support. He said, "We already possess world-class technology and production capabilities in some fields such as memory semiconductors and OLED (organic light-emitting diode)," adding, "The government must provide seamless support in terms of location, workforce, and tax benefits."

In line with this, the government decided to accelerate its 'talent development' strategy. Last month, President Yoon personally chaired a talent development strategy meeting, stating, "The driving force of national development is science and technology, and nurturing talent is the most important." At the meeting on this day, President Yoon also called on Deputy Prime Minister and Minister of Education Lee Ju-ho to request linked policy support.

Ultimately, given the shortage of natural resources, President Yoon judged that securing national competitiveness in the upcoming Fourth Industrial Revolution era requires talent to lead new fields. Since taking office, he has established the 'National Science and Technology Advisory Council,' the highest-level science and technology policy decision-making body chaired by the president, and directly identified 12 national strategic technologies.

In particular, semiconductors are a national security asset and account for 20% of the country's total exports, making it a sector President Yoon has personally overseen since early in his term. At the Cabinet meeting held in June last year, he instructed all ministries to prepare semiconductor talent development plans, saying, "We must do this with our lives on the line." The government announced a plan the following month to nurture 150,000 semiconductor talents by 2031.

Despite the opposition-controlled National Assembly and repeated conflicts between ruling and opposition parties, it is encouraging that the Democratic Party of Korea decided yesterday to accept the government's proposal on the amendment to the Restriction of Special Taxation Act, known as the 'K-Chips Act.' The government proposal, submitted to the National Assembly in January this year to support the semiconductor industry, includes raising the tax credit rate for facility investments in semiconductors from the current 8% to 15% for large and medium-sized enterprises and from 16% to 25% for small and medium-sized enterprises.

The Democratic Party also appears to interpret the addition of renewable energy, green hydrogen, and future car sectors to receive tax benefits as a measure to enhance national competitiveness. President Yoon said, "The government will make every effort to ensure that the matters announced today are promptly implemented," adding, "I hope the government's bill to expand the tax credit for national advanced industry facility investments submitted to the National Assembly will pass as soon as possible."