South Korea commits US$4bn to bolster tech sectors
The South Korean government will spend S$4.7 trillion (US$3.9bn) of its 2020 budget on technologies such as artificial intelligence (AI), in a bid to boost R&D, infrastructure and economic growth.
The government plans to spend a combined S$1.7 trillion on big data platforms, AI and 5G network services next year. A further S$3 trillion will be invested in semiconductors, bio-health and “future car technology”.
“The planned investment will, at first, contribute to infrastructure for the nation’s data, 5G network and AI projects. The government will then financially support system semiconductors, bio-health tech firms and carmakers to help with their innovative growth,” deputy prime minister and finance minister Hong Nam-ki said during a cabinet meeting on Wednesday.
The plan includes launching an AI research and development complex in Gwangju, a city in the south west of the country, and developing next-generation robotic technology based on AI and the cloud.
Hong added that the government would offer vouchers to small- and mid-sized companies to help them buy AI-related solutions; support domestic hospitals’ efforts to establish ‘big data’ platforms holding patient information; foster research into bio drugs and medical devices; and provide subsidies for research and development projects focusing on hydrogen and electric vehicle technologies, particularly advancements in battery technology which could subsequently be applied to other industries.
Another priority is to create ‘digital twins’: virtual representations of physical devices or assets that enables simulations of objects to be tested before they are built.
The government also intends to build a testbed for semiconductors. The move comes after president Moon Jae-in announced a plan last month to expand the government’s support for innovative growth in the nation’s manufacturing sector, especially by nurturing globally competitive start-up businesses, as part of countermeasures against Tokyo’s decision to curb its exports of materials vital for semiconductor production, The Korea Times reported.
Worsening domestic demand
The cabinet meeting at which the tech budget was agreed took place at the Export-Import Bank of Korea headquarters in Seoul, and was convened to discuss measures to enhance the country’s economic vitality and innovative growth.
The money earmarked for tech innovation will come from the government’s 2020 budget of more than S$500 trillion (US$441bn).
Concerns are growing over the government’s high levels of spending, but experts say expenditure is a must to stimulate the sluggish economy. “The government spending is aimed at boosting the nation’s worsening domestic demand,” Yonsei University economist Sung Tae-yoon told The Korea Times. “A further expansion of its fiscal deficit could be an issue, but spending is a must at the moment. The government should monitor further developments.”
According to the Ministry of Economy and Finance, Korea’s consolidated public fiscal balance, which is one of the key barometers measuring the nation’s financial soundness, posted a deficit of S$38.5 trillion ($3.16bn) between January and June 2019, the worst figure since the ministry began collecting related data in 2011.
South Korea’s exports declined 11% in July compared to the previous month, continuing a downward trend. The nation’s trade surplus stood at US$2.44bn in July, down US$6.89bn from a year ago.
Meanwhile, South Korea has signed a continuity Free Trade Deal with the UK, ensuring that both countries will continue to trade on existing terms after Britain leaves the EU. They currently trade under the 2011 EU-Korea Free Trade Agreement.
About Mia Hunt
Mia is a journalist and editor with a background in covering commercial property, having been market reports and supplements editor at trade title Property Week and deputy editor of Shopping Centre magazine, now known as Retail Destination. She has also undertaken freelance work for several publications including the preview magazine of international trade show, MAPIC, and TES Global (formerly the Times Educational Supplement) and has produced a white paper on energy efficiency in business for E.ON. Between 2014 and 2016, she was a member of the Revo Customer Experience Committee and an ACE Awards judge. Mia graduated from Kingston University with a first-class degree in journalism and was part of the team that produced The River newspaper, which won Publication of the Year at the Guardian Student Media Awards in 2010.
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