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(News Focus) Moon to focus on 4th industrial revolution, smaller firms to fuel growth

All Headlines 00:35 May 10, 2017

By Park Sang-soo

SEOUL, May 10 (Yonhap) -- Finding new growth engines is one of the most urgent tasks facing Asia's fourth-largest economy that's still heavily reliant on the manufacturing sector.

The case is also the same for the incoming government. The so-called fourth industrial revolution is a key agenda that Moon Jae-in, who has effectively won the presidential election, has emphasized on the campaign trail, and he has stated that it can bring seismic changes to the country's industrial sector, whose productivity and employment can be bolstered by headway in cloud computing, big data and other cutting-edge technologies.

The latest industrial revolution calls for changing the industrial sector through the combination of various cyber and physical systems.

During the presidential race, Moon vowed to establish a "Fourth Industrial Revolution committee" chaired by the president to lead positive change by forming a collaborative state-private partnership for a "Smart KOREA."

He also promised full support for key technologies such as electric vehicles, self-driving cars, renewable energy, artificial intelligence, 3-D printing, big data and industrial robots.

Moon Jae-in delivers a keynote speech at a forum on the fourth industrial revolution in Seoul on Feb. 2, 2017. (Yonhap)

"IoT is the basic infrastructure for the latest industrial revolution, and I plan to set up the industrial revolution committee directly under the president's office," Moon said earlier, stressing that the new government will implement policies that make every newly built home, road and city smarter.

The manufacturing-based Korean economy has plenty of opportunities in the digital revolution era given its technical prowess, good ICT infrastructure and high level of spending on research and development.

The new government is expected to seek a paradigm shift toward a more digitalized economy under which all industrial segments are merged for more efficient production and to lower the overall cost of goods that can enhance competitiveness.

Experts have said that South Korea should actually embrace "creative destruction" at this stage and embrace new changes.

By making the necessary changes, South Korea can build on the economic success it has seen over the last few decades, Moon asserted.

In fact, South Korea has been already moving to incorporate the Fourth Industrial Revolution into the economy.

Last year, the government launched the fourth-revolution strategy committee comprised of government officials, experts and business people. The committee aims to spearhead policy-making on cloud computing, Internet of Things, production automation, management and governance system, and the transformation of economy, society and education.

Moon's economic policies largely boil down to generating more jobs, which he believes is the most important for the economy.

Moon claimed earlier that his government will increase investment in 10 major areas that include the Fourth Industrial Revolution and the social services sector, which can stimulate more hiring.

Moon said earlier such investments would include creating 810,000 new jobs in the public sector during his five-year presidency, which he said would prompt the private sector to create 500,000 new jobs per year.

President-elect Moon Jae-in speaks during a meeting with entrepreneurs in Seoul on April 10, 2017. (Yonhap)

But his campaign to increase jobs through the latest industrial revolution is seen as somewhat contrary to what ordinary people perceive.

More than 70 percent of South Koreans fear change will threaten their jobs, even though large numbers still see it as a positive development that will benefit mankind down the road, a recent survey showed.

The poll conducted by the Media Research Center of the Korea Press Foundation said 89.9 percent believe the job market will shrink due to the next industrial revolution, up 24.3 percentage points from the same survey a year ago. While 76.5 percent worry that their own jobs will be threatened with a bigger 83.4 percent projected that their children will face an even tougher job market.

But the report by the state-run think tank Korea Development Institute (KDI) said that the country will be the least affected among OECD member states by the rapid changes.

Citing OECD statistics, the KDI report said there is a 70 percent probability that forthcoming automation will cause a loss of about 9 percent of jobs.

The comparable figure for South Korea was 6 percent, the lowest among OECD members, compared to more than 10 percent for Germany, Britain, Spain and Austria, according to the report.

It cited South Korea's preemptive investment in automation at production facilities and the high level of education of employees as cushions to change.

(News Focus) Moon to focus on 4th industrial revolution, smaller firms to fuel growth - 2

The Moon government is also expected to implement policies friendly to smaller firms. In South Korea, smaller entrepreneurs have been stifled due to conglomerate-focused policies and unfair business practices of larger players.

Moon has promised to establish a new government ministry that oversees policies targeted at smaller firms, thus making them more competitive and helping them grow. He also vowed to implement measures to protect smaller firms from conglomerates' malpractice.

The President-elect is moreover seen as focusing on relaxing regulations on start-ups and expanding assistance to them.

Moon promised to guarantee participation for startups in public sector procurement, set required ratios for such procurements, and make the government a major buyer for small companies and startups so they can effectively market their products.

The new government will expand monetary assistance through such methods as a startup supporting fund, fund of funds and angel matching fund, and scrap the loan guarantee system and improve mechanisms for credit loans.

Also, the new government will seek to help smaller firms hire more workers by financing part of their costs, and promoting a campaign to employee more young workers as well.


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