31st Meeting of Central Economic Response Headquarters
Government to Further Develop Services
Deputy Prime Minister Hong Nam-ki presided over the 31st Meeting of the Central Economic Response Headquarters held on March 3, and discussed plans to further develop the country’s service sector, help airlines get through the pandemic and promote K-food exports. DPM Hong talked about the current economic situation at the beginning of the meeting.
The following is a summary of Deputy Prime Minister Hong’s keynote address.
Current economic situation
The economy saw exports, retail sales and consumer confidence improving this year. February exports rose 9.5 percent from a year ago, going up for four straight months. Although industrial activities edged down 0.6 percent in January, retail sales improved 1.6 percent backed by strong durable goods sales, and February consumer confidence improved.
The government, to boost demand, as well as help suffering small businesses, has drawn up a 15 trillion won worth of extra budget proposal, which will be submitted to the National Assembly on March 4.
Further develop the service sector
We have a service sector full of potential as it takes about 60-70 percent of the country’s total added value and employment, compared with advanced economies’ 70-80 percent. Our services lag behind manufacturing in innovation and productivity. To raise the level of added value services create to at least 65 percent and help the service sector provide over 300,000 decent jobs, the government has prepared its service development strategies, which cover
- Make services smart: Help small businesses and SMEs with digitalizing their operation, and spend 2 trillion won on guarantees to encourage SMEs to use big data and AI
- Provide vouchers and coupons worth 0.5 trillion won to boost hotels and dining out services, and leisure activity services
- Promote R&D: Spend 7 trillion won by 2025 on services R&D support, as well as over 20 trillion won of export financing to help healthcare and contents exports
- Select eight promising services that will receive solid support: For example, raise 0.3 trillion won worth of tourism startup funds by 2025, build 250 smart logistics centers and increase fintech funds to 0.5 trillion won
- Make traditional markets digital: Work on 500 digitalized traditional markets by 2025 and expand the government’s big data-based business consulting program to 30 business sectors
Help airlines get through the pandemic
Despite over 4 trillion won worth of support last year, airlines have severely suffered with their passengers declining 98 percent. To help this struggling industry, the government will do the following with its short-term focus on surviving the crisis and mid- to long-term focus on getting more competitive.
- Survive the crisis: Extend the airport fee waiver until the end of June, as well as consider maintaining the special employment support given to the industry and providing liquidity-strapped LCCs with additional financial support
- Boost demand: Work on setting up travel corridors with other countries and adopting a mobile travel pass that verifies virus test results
- Expand the flights to nowhere program, an outbound flight, to inbound flights
- Work to further develop the industry: Revise the Aviation Business Act to develop aviation financing, and work to provide guarantees and raise aviation development funds
Promote K-food exports
Korea’s fresh food exports hit the largest last year at US $9.89 billion. The government will work to help maintain this momentum as we promote sales in online markets, as well as entering new markets.
- Work to open a Korean food sector in large global online shopping sites, and provide e-commerce support to over 300 K-food exporters
- Work to use e-commerce platforms of New South and New North Asian countries
- Promote modifying tradition foods into ones appropriate for exports