The government Wednesday announced a package of measures aimed at helping promote corporate investment in new industries that can strengthen the country's long-term growth potential and boost its sagging exports.
Regulations will be drastically removed and an effective support system will be set up to encourage companies to carry out their investment plans.
A total of 81 firms are planning to spend 44 trillion won (S$50 billion) over the next three years on 113 projects in the five areas of new energy industry, information and communications technology applied in manufacturing, biohealth, new materials and high-end consumer goods, according to a survey by the government.
Policymakers expected their support for the planned corporate investments to result in generating 120 trillion won worth of production, creating 415,000 jobs and increasing exports by $65 billion.
In a meeting presided over by President Park Geun-hye, economic officials pledged to abolish or improve all regulations cited by corporations as holding back their investment.
Park instructed them to make a drastic shift in the regulatory system from positive to negative control to relieve entrepreneurs of all unnecessary regulations.
In response to various corporate demands, the government will set aside 11.5 trillion won to fund research and development projects on future growth engines, allow colleges to establish departments on new industrial sectors such as smart grid and drones in addition to expanding financial and taxation benefits for investors in new industries.
A fast-track system will be introduced to help new products beyond existing standards for accreditation enter markets without delay.
Nurturing new industries is expected to result in widening the horizon for Korea's declining exports. The country saw its outbound shipments plunge by 18.5 per cent from a year earlier in January following a 7.9 per cent drop in 2015.
In the meeting convened to seek ways to enhance trade and investment, the government put forward a set of measures to boost exports, which included diversifying export items and markets and encouraging more small and domestic demand-oriented companies to ship their goods abroad. Support for exports through online processes will be improved and massive trade fairs are planned to be held in China, Iran and Brazil to promote select consumer items -- including cosmetics, fashion and baby goods -- with the attendance of Korean pop icons.
Officials at the Trade Ministry conceded it could hardly be expected for the country's exports to rebound in the near future as global demand has been decreasing amid China's slowdown and tumbling oil prices. The competitiveness of Korea's manufacturing exporters has also weakened, with their 13 major items remaining unchanged for the past decade.
More worrisome for Asia's fourth-largest economy is that domestic demand is showing signs of turning downward. Policymakers have run out of effective measures to boost consumer spending, which offset the decline in exports to shore up last year's growth at 2.6 per cent -- a disappointing performance that could have been far worse without the stimulus package.
With fiscal spending and household consumption near their limits, it is more important to galvanize private-sector investments to revitalise the economy.
In the meeting, government ministries also unveiled a wide range of measures designed to help enhance investments in new types of service sectors.
Regulations will be eased and tax credits will be increased to help expand sports facilities as part of efforts to make the industry grow from 41 trillion won in 2014 to 50 trillion won in 2017, hiring more than 320,000 people.
Legal and institutional foundations will be fine-tuned and solidified for the advancement of sharing businesses, including accommodations and transportation.
Policies will be pursued to enable Korean companies to take a larger share of the rapidly growing global health care market on the back of advanced ICT and accumulated big data on health.
Local universities will be given freer hands in setting up overseas campuses and running joint educational courses with foreign institutions of higher learning.
Measures will also be implemented to promote private investment in agricultural and fisheries sectors to transform them into high value-added industries.
More immediately, the government will take swift actions to help corporations undertake six projects that have been put on hold due to regulations and disagreements between administrative agencies. If completed, these projects, which include the construction of a corporate research and development complex in Seoul and a cultural facility featuring Korean Wave contents in a town northwest of the capital city, are expected to bring about more than 6.2 trillion won in economic effect.