South Korean President Moon Jae-in has pledged a new industrial policy that can be summarized as “the world’s factory for high-tech industries” in a public address marking his third year in office. It is a scheme to make the nation a base for high-tech manufacturing industry through its excellent quarantine results, turning the COVID-19 crisis where the specialization structure of the global community is coming to a rupture into an opportunity. “Countries around the world have now begun seeking innovative capabilities and safe investment destinations rather than cheap labor,” said Moon in the same vein.
The problem is that it is hard to say Korea’s manufacturing environment is superior to China and other countries even though the nation’s quarantine system is relatively better than its competitors. Some say that the first task is to eliminate relevant regulations and overhaul business environments to become the world’s factory for high-tech industries. “Korea should let the world know that it has an institutional environment suitable for high-tech industries through radical measures such as improving labor regulations,” said Professor Jeong In-gyo of International Trade at Inha University. “Benefits such as supporting high-caliber talents are important as countries around the world could compete to attract talents in high-tech industries after the COVID-19 crisis,” a government official.
President Moon also announced the government would promote bold strategies to attract Korean businesses back to the country. The government legislated “Act on Assistance to Korean Off-shore Enterprises in Repatriation” in 2014, but only 68 businesses have returned to Korea as of last month and only 38 of them are operating factories in Korea. Businesses returned to Korea invested 879 billion won, but the government subsidy such as tax benefits was as little as 24.6 billion won. Businesses argue that Korean businesses operating overseas would return only when there is an incentive that could offset the labor cost and regulations in Korea.