11th Meeting of Central Economic Response Headquarters
1st Ministerial Meeting on the Korean New Deal
29th Ministerial Meeting on the Economy
Government to Promote Private Investment in
Korean New Deal
Deputy Prime Minister Hong Nam-ki presided over the 11th Meeting of the Central Economic Response Headquarters held on July 23, that is the 1st Ministerial Meeting on the Korean New Deal and 28th Ministerial Meeting on the Economy. Deputy Prime Minister Hong talked about the current economic situation and plans to boost private sector investment in the Korean New Deal.
The following is a summary of DPM Hong’s keynote address.
Current economic situation
The second quarter economy shrank 3.3 percent from the previous quarter and 2.9 percent from a year ago according to the advance estimate just released. The economy contracted further than we projected amid weak global demand. Domestic consumption picked up backed by fiscal stimulus while exports remained weak. However, the second quarter growth shows that the economy is doing relatively well compared with major economies as most OECD member countries are projected to see a two-digit contract for that period.
Given a jump in credit card spending in June and an improvement in average daily exports in July, we expect a turnaround in the third quarter and the government will do its utmost to help the economy recover. First, we will implement more than 75 percent of the third extra budget projects within three months from now, as well as announce measures to promote consumption, investment and exports. Second, we will press ahead with measures to promote private investment in public projects and encourage manufacturing SMEs to work on production innovation with AI and data, as well as announce in July plans to provide financial support for ventures and startups. Third, we will work to boost consumption and exports, and August 17 designated as a temporary holiday, we will seek ways to promote tourism during the period (August 15 to 17).
Korean New Deal action plans
We have been working to come up with action plans for the Korean New Deal, as well as provide a legal basis and improve regulations to implement them. We will work through the Ministerial Meeting on the Korean New Deal.
Topics of discussion
1) Current economic situation
2) Plans to promote private investment in public projects, including Korean New Deal projects
- Promote a total of over 30 trillion won worth of private investment in public projects: The 10 trillion won worth of SOC projects announced so far + 7.6 trillion won worth of new projects to improve transportation and sewage treatment + 12.7 trillion won worth of Korean New Deal projects, such as smart and green schools and hydrogen fueling stations, and projects to improve earthquake resistance
- Give tax incentives to gains from infrastructure funds, promote publicly offered infrastructure funds, and expand incentives to and streamline the process for SOC projects offered by private investors
- Work to take off over 25 trillion won worth of private sector projects this year, a part of the 100 trillion won investment projects of which the plans were announced this year
3) Encourage manufacturing SMEs to innovate their production with AI and data
- Build an AI manufacturing platform by 2022, which provides ventures with AI solution found through data analyses
- Build 1000 smart factories equipped with 5G and AI, and set up smart factory clusters for data sharing
- Develop tech suppliers for smart manufacturing, such as by promoting R&Ds, growing professional workforce, supporting startups and helping with exports
- Work on a legal basis for manufacturing data collection and analyses