Interview with Policymaker
“The global environment industry grew at an annual average rate of 4% between 2000 and 2010 and is expected to break the US$1 trillion mark by 2017,” said Park Yong-kyu, director of the Environmental Industry Division of the Ministry of Environment, in a recent exclusive interview with BusinessKorea. He emphasized, “Now is the time for Korean companies in the industry to accelerate their overseas business out of the domestic market, which has already reached saturation, and to this end the government will have to seek measures to increase their brand awareness and boost their competitiveness by achieving economy of scale.” The environment industry of Korea accounted for 6.5% of the global market in 2011, with total sales of US$822 billion, yet its market share stood at just 0.6% in regards to exports. “This is why more policy for the systematic promotion of the industry is needed, along with endeavors for overseas market penetration,” director Park added.
What support measures are available for the overseas business of small and midsize enterprises (SMEs) in the sector, representing over 90% of the domestic environment industry?
The Ministry of Environment is providing phased measures, ranging from market survey and networking to assistance for projects abroad, so that they can successfully enter the global environment market.
Examples include the establishment of master plans for environmental improvement in emerging countries, business localization assistance for the export of promising technologies, feasibility studies associated with environment industry and the dispatch of market survey teams.
Furthermore, the Ministry is running Environmental Cooperation Centers in China, Vietnam and Indonesia, which are the key points of its international joint projects, with two more scheduled to be opened in Columbia and Algeria before the end of 2013.
What is the main policy and programs the government is engaged in to increase exports?
More than a few SMEs in the environment industry have had difficulties opening up new markets due to a lack of experience and know-how even though they are in possession of advanced technologies.
In order to deal with this situation, the government launched the Green Export 100 Project. Its purpose is to provide blanket assistance in the form of corporate capability evaluation, export destination selection and support for technological verification, marketing and project procurement.
100 SMEs in the industry will be given support for overseas business between 2014 and 2017. The project shares the same thread with the Park Geun-hye administration’s goal of the globalization of SMEs and the creation of a creative economy. In addition, it is expected to contribute to tackling the unemployment problem.
What is the reason for the government’s dedication to the environment industry and what has it so far accomplished?
Korea entered the industry somewhat later than European nations and Japan did. Furthermore, a number of Korean companies with advanced technologies still remain in the limited domestic market due to a lack of information, capital and strategy. The industry is characterized by a larger number of contracts led by the government, which has made it difficult for companies to make inroads abroad on their own, and thus cooperation between the public and private sectors is urgently needed.
In this context, the government established a five-year plan for overseas market penetration back in 2009. Various projects have been launched abroad since then to attain the target of US$1 trillion exports by 2017, and as a result, total exports from the industry increased approximately seven-fold between 2004 and 2011 to 4.9 trillion won.
During the most recent five years, the government’s export assistance programs, in which no less than 42.4 billion won has been invested, resulted in 1.065 trillion won in exports, recording a rate of return of 2,512%. To further the accomplishment, it has set up customized backup systems for companies in each market exploration phase, as well as come up with support measures for strategy establishment, business opportunity creation, order procurement and consulting and marketing.
The excellence of the cooperative projects is evidenced by the El Harrach River Restoration Project in Algeria, which is a follow-up of the ministerial meeting between Korea and the African country. The 500 billion won-worth project constitutes a part of the master plan for the improvement of the environmental conditions of Algeria. The Korean government has taken the lead in economic diplomacy, allowing many Korean firms to find their way into the local market.
What should participants in the industry do to spur growth in the sector?
I believe that one of the most important things is to make the most of the government’s programs to work on more competitive technologies, as well as train future engineers for sustainable growth and cooperate more closely with not only other companies but also related authorities.
Continuous efforts are required to develop unprecedented technologies by combining information technology and biotechnology with the sector. Major corporations also have a role to play, that is, let SMEs utilize their marketing resources and networking infrastructure so that their technological expertise can lead to higher competitiveness in the global arena.
What fields of the environment industry should we pay more attention to in addition to environmental technology?
These days, fields such as climate management, biological resources management, environmental safety, healthcare and knowledge service are rapidly emerging as promising and sustainable segments. Another good example is the environmental consulting industry, in which total services are provided, from investment attraction to project planning and implementation, in order to maintain the growth momentum of the industry.
Not only is the environmental consulting industry a high value added, knowledge service industry itself, but it is even more significant in that it can act as a stimulus to accelerate the growth of companies in the sector.
Furthermore, the development of substitutes for environmental harmful substances and new biological resources is expected to give great opportunities as public concern over the management of toxic chemical materials and environmental diseases rises. The market demand for adaptation to climate change, better meteorological services, greenhouse gas reduction and weather insurance will also surge from the viewpoint of mutual prosperity between environment and economy.
The Global Green Hub Korea 2013 was held in Songdo, Incheon City in April this year. What accomplishments were made and what is the plan for next year’s conference?
The event took place between April 29 and 30 in celebration of Korea’s hosting of the Green Climate Fund (GCF). A total of 213 ordering bodies were invited from 56 countries where a lot of business opportunities are anticipated in the areas of water supply management, sewer treatment, atmospheric management fields and so forth. Business meetings were held with them for 273 new projects whose combined size is estimated at US$34.5 billion.
At the event, the Korean government signed an MOU with Bulgaria to share information, experience and technologies. Including a US$20 million billion agreement concluded between Hankuk Fiber AMS and Indonesia’s TBE for the construction of water supply pipes, more than US$1.7 billion-worth of contracts were signed during the period. In 2014, the conference is scheduled to take place at the COEX Convention Center in Seoul between April 29 and 30.