Interview with Policy Maker

Hong Nam-ki, Vice Minister who is responsible for the creative economy policy in the Ministry of Science and ICT and Future Planning.
Hong Nam-ki, Vice Minister who is responsible for the creative economy policy in the Ministry of Science and ICT and Future Planning.

 

 As the launch of Park Geun-hye’s administration’s economic icon Creative Economy meets its 4th anniversary, BusinessKorea tried to have an interview with a key personnel in the government who has pursued the policy. We sat down with Hong Nam-ki, Vice Minister who is responsible for the creative economic policy in the Ministry of Science, ICT and Future Planning. Following are excerpts from the interview with him.

The incumbent government’s creative economy policy is in its fourth year now. What has been its effect on the South Korean economy as a whole?

Creative economy platforms have been set up in the form of 17 Centers for Creative Economy & Innovation (CCEIs), the Creative Economy Town and the like while more and more people are getting interested in starting their own businesses based on crowd funding and diverse incentives for startup promotion.

The number of venture firms in South Korea exceeded 30,000 last year, when the new venture investment hit a record high of 2.1 trillion won. Investment payback tools such as KOSDAQ have been showing signs of recovery as well, creating another venture and startup boom across the country.

Startup platforms and systems have been fostered so more ideas can become successful business models. The number of college student groups for business establishment jumped from 1,222 to 4,070 between 2012 and 2015, which implies an increasing number of young people are now willing to run their own businesses.

The OECD recently praised South Korea as one of the most innovative countries in the world. Last year, its CCEI model was exported to Saudi Arabia, Brazil, Honduras and many more to add to the global interest in and reputation of South Korea’s creative economy policy.

The CCEIs are about to celebrate their first anniversary across the country. What are their representative success stories?

The CCEIs assisted in the business of 920 startups as of the end of March this year, attracting an investment of 143.6 billion won in total. In addition, the firms have increased their sales by 76.9 billion won and employed 750 persons with the CCEIs.

Marine Techno, which produces cosmetics by using collagen extracted from marine biomass, succeeded in crowd funding with the South Jeolla Provincial CCEI. The company recently signed export contracts worth US$200,000 in total with distribution firms in the U.S. and Mexico during President Park Geun-hye’s visit to the countries. The other similar examples include DOT and TEGway. The former is the developer of the world’s first smart braille watch and the latter’s flexible and wearable thermoelectric generator has been extolled by the UNESCO as the top future technology to change the world.

KPT, in the meantime, developed bead-shaped cosmetics in cooperation with the LG Group and CES developed heating cables for agricultural use by making use of Hyosung’s carbon fiber.

How is the government helping out those failing to become successful?

The government is striving to give a second chance to as many startups as possible. To this end, simpler corporate rehabilitation processes have been brought in and startup owners have been allowed to be exempted from joint surety in the Korea Technology Finance Corporation’s and the Korea Credit Guarantee Fund’s guarantees for startups five years old or less. An immediate removal of the bad credit records of those succeeding in credit recovery is scheduled to be implemented in June this year as well.

Different financing sources, such as the Growth Ladder Fund and the Fund of Funds, have been prepared so that startups can be less dependent on loans and can have an easier access to investment. Crowd funding was introduced in January this year so the general public can invest even a small amount of money in startups. The government is going to keep trying to facilitate M&A, payback and so on, too.

The government is planning to run regulation-free and employment zones in the CCEIs for job creation and economic revitalization. What are the background and details?

The regulation-free zones are to get rid of unnecessary regulations for the 27 strategic industries selected by 14 cities and provinces across the country. The idea is to enhance the competitiveness of those industries while attracting more investment from the private sector. Companies in the zones will be able to work on innovative technologies more freely and their outcomes will result in the creation of new markets based on customized financial assistance and tax incentives. A special act was tabled in March this year to this end and it is expected to be passed by the National Assembly soon.

The employment zones, all set up by the end of last month, are to function as youth employment hubs where young people can find decent jobs in promising startups, innovative small and medium enterprises and larger corporations. At the same time, the employment zones will act as regional employment project coordinators.

What did you feel after looking around the CCEIs?

Since taking office, I have looked around 10 CCEIs in Ulsan, South Chungcheong Province, etc. I believe that they are creating a new momentum for regional development in tandem with the local governments, diverse organizations and respective corporate patrons.

At present, they are successfully contributing to the joint prosperity of large corporations and smaller firms by working closely together with each other. What matters now is to make it continuous. The firms housed in the CCEIs are coming up with win-win business models with local businesses and I am convinced that more of such successful cooperation models will follow one after another with time.

In Changwon, South Gyeongsang Province, future startup operators held a voluntary forum in March to share their ideas and capabilities. I could feel their passion and enthusiasm, which was more than enough to impress and move me.

More and more people have been getting interested in artificial intelligence since the recent Go match between Lee Se-dol and AlphaGo. What is the progress of South Korea’s AI development?

I think South Korea still has a far way to go when it comes to the manpower and industrial infrastructure regarding intelligent information technology. According to the Institute for Information & Communications Technology, South Korea is currently falling behind industry leaders by a margin of 2.6 years.

Nonetheless, South Korean enterprises such as Samsung Electronics are striving to develop intelligent information technology by means of R&D and investment and the South Korean government, on its part, is continuing to assist in the efforts and train engineers in the framework of long-term R&D projects related to linguistic intelligence, visual intelligence and so on.

The government recently released a series of plans to accelerate the growth of the sector. According to the plans, it is to set up an intelligent information technology institute in the first half of this year with Samsung Electronics, SK Telecom and Naver and then launch flagship projects for the development of spatial intelligence and emotional intelligence technologies and the like. Furthermore, it is planning to expand its investment in basic sciences, industrial mathematics, supercomputer development, brain sciences, etc.

 

 

 

 

 

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