Focusing on Basic
Technology Development

MOCIE implements key industry development strategies to handle challenges

Korea strives to raise its own basic technologies in the domestic materials industry to a 90 percent level of advanced countries with the goal of becoming a global materials power Korea by 2015, Lee Tae-yong, director general of Main Manufacturing Industry Office from the Ministry of Commerce, Industry and Energy, says.
Lee also elaborated on development strategies of other key industries, including general machinery, textile, automobile, steel and petrochemicals, during an interview with NewsWorld. The following are excerpts of his interview.
Question: Will you tell our readers about your ministry's mid- and long-term materials industry development plan and strategy to cultivate the industry?
Answer: The domestic parts and materials industries have so far achieved quantitative growth, but the materials industry is relatively backward compared to the parts industry. The materials industry is responsible for contributing to widening Korea's trade deficit against Japan, so there is an urgent need for raising its capability in order to solve the trade issue with Japan.
The foremost thing the domestic materials industry will have to do in order to depart from its dependence on materials imported from Japan and achieve qualitative growth to secure key basic technologies. In reality, the government's support is needed from a long-term perspective to make up for market failures stemming from the characteristics of technology development - high-risk and high-return.
To this end, the ministry has drawn up a materials industry development vision and strategy, which was worked out by the ministry last August, calls for securing 90 percent of basic technologies compared to advanced countries by 2015 with the goal of becoming a global material industry power Korea. Korea aims to export $150 billion worth of materials, register a $16 billion trade surplus, preoccupy the 21 trillion won future market and substitute 7 trillion won worth of imported materials by 2015.
The ministry plans to set aside 730 billion won in government budgets for securing the top 50 basic technologies for 10 years from 2007 and channel 120 billion won for developing materials infrastructure as the establishment of a materials bank, a specialized institution designed to produce, process and disseminate materials-related information, cultivation of specialized manpower and support for international cooperation and standardization. It operates long-term programs on the development of key basic technologies designed to preoccupy the futuristic market and substitute for imported materials for the first time in Korea, like those of advanced countries. Comprehensive innovative networks have been established in the metals, chemicals and ceramic sectors by designating Korea Research Institute of Chemical Technology and Korea Institute of Ceramic ENG. & TECH as a hub institution of each sector, respectively and team them with other research institutes, universities and 18 reliability centers as spoke institutions.
Thanks to the active implementation of the mid- and long-term material industry development plan and strategy, the ministry aims to raise the effects of virtuous cycles of industries - brisk exports, investments and creation of new jobs - while strengthening a foundation for dynamic global positioning and continuous trade surplus.
Q: Will you explain the strategy designed to level up competitiveness of the general machinery, dubbed "MAIN-V2015"?
A: The domestic general machinery industry chalked up $22.1 billion worth of exports and a $4.3 billion trade surplus during last year, and the prospects of the industry are forecast to be rosy with a projection of $26 billion exports during this year. However, Korea's design and other basic technologies stand at less than half of the levels of advanced counties. Korea faces challenges like the emergence of China and other developing countries as its archrivals in the foreign market.
Recognizing the need for raising competitiveness of the general machinery industry and fostering it as a new engine for exports, the ministry announced an innovate strategy designed to beef up the industry's competitive edge, dubbed "Machinery Innovation Vision 2015"or MAIN-V 2015. The strategy calls for localization of production equipment and facilities, establishment of infrastructure for innovation of the machinery industry and fostering the machinery industry as a new growth engine for exports. The ministry plans to allocate 500 billion won by 2015 in developing top 100 key production equipment and facilities of mainstay industries with the goal of raising its localization rate from 50 percent in 2006 to 80 percent in 2015. It is working hard to lay the foundation for the development of the machinery industry by expanding the i-Manufacturing system and fostering technology manpower. The ministry also adopts policies designed to promote general machinery exports, varying on the characteristics of each region and collaborate with relevant organizations.
Thanks to these polices, the general machinery industry is predicted to post $80 billion in general machinery exports and a $20 billion trade surplus in 2015. In the second half of the year, the ministry plans to work out actions plans in cooperation with the Korea Research Institute of Chemical Technology, Korea Institute of Industrial Technology and Korea Association of Machinery Industry.
Q: Will you tell the current status of Korea-U.S, negotiations in the textile field and strategies designed to develop the domestic textile industry?
A: Korea demanded the United States to open its textile market during the three rounds of negotiations of Korea-U.S. Free Trade Agreement (FTA) textile subcommittee. Last August, both sides exchanged a proposal of concessions. American delegates promised their Korean counterparts additional market-opening measures, but failed to meet Korea's expectations, so the Korean side plans to demand wider market-opening opportunities.
The U.S. side has demanded that they be allowed to introduce special safeguard measures and steps designed to prevent roundabout exports in a bid to protect the American textile market. Korea has been holding such diverse channels of consultations as Korea-U.S. FTA private-sector strategy meetings and public hearings so as to explore a consensus each time when both sides wrapped up negotiations. The Korean delegates plan to hold negotiations with the United States, based on the opinions of the domestic textile industry.
In order to develop Korea into a leader of the global textile fashion industry, the ministry has come up with strategies designed to ensure structural innovations of the industry: raising competitiveness in futuristic, promising sectors; building up a foundation for global brands; strategically promoting overseas marketing activities; and market-friendly restructuring.
The government is attaching priority on the development of such areas as industrial textiles, fashion apparels and IT-based dying, which are likely to emerge as promising sectors. The industrial technology road map, worked out in 2006, calls for exploring and implementing 30 mid-term key tasks and 30 parts and materials tasks in the next 9 years. It is putting more energy into boosting fashion design, a weak point of the domestic textile fashion industry, and marketing activities, while expediting market-friendly restructuring through the introduction of textile funds.
Q: Will you give the details of a strategy designed to nurture the domestic environmental-friendly automobile industry?
A: The automobile industry has witnessed a paradigm shift from the conventional 100-odd-year combustion engine to hybrid and fuel cell cars.
With this trend in mind, the government has designated futuristic cars as one of top 10 growth engine industries in 2004. It has proactively been providing support for the development and dissemination of hybrid and fuel cell cars since October, the same year when an act to the same effect was promulgated.
The MOCIE is striving to raise Korea's technological power for the development of environmentally friendly cars from the current 80 percent to the equivalent of advanced countries. Korean automobile manufacturers are working on the development of hybrid cars with a 50 percent higher energy efficiency rate than the conventional ones and more than 30 percent less gas exhaust. By 2008, 4,170 units of such hybrid cars will be supplied to public organizations under a pilot program. A small number of units will be churned out from 2009 with the goal of raising the figure to the 300,000 level around 2011.
Korean automakers aim to test-operate fuel cell cars in the year 2010. Thirty-four, domestically produced fuel cell cars will hit the streets by 2008 under a program designed to pre-test and gather data on such things as actual driving, hydrogen gas stations and hydrogen gas injection.
Besides, the government is considering a wide rage of support steps designed to secure a competitive edge of environmentally friendly cars.
Q: What steps are in place to develop the domestic steel industry in a mid- and long-term perspective?
A: Korea produced 48 million ton of crude steel during 2005 to rank fifth in terms of steel production, but the nation faces such challenges as a rapid structural change, a breath-taking growth of such late-comers as China and India and M&As by giant steelmakers. Last June, the world-top steelmaker Mittal Steel reached a deal to merge with the second-place Arcelor. The Korean steel industry is facing with such problems as its dependence on major materials imported from foreign countries and a lack of basic technologies.
Recognizing the reality of the industry, the government has pushed ahead with mid- and long-term measures to maintain a competitive edge and develop the industry into a world-class one. First, Korean steelmakers are trying to develop environment-friendly, advanced steel-making technologies as they did with the introduction of FINEX and strip casting. It plans to accelerate its efforts to develop futuristic, high-demand materials. Secondly, the government is striving to secure a stable supply of iron ore and coking coal through expanded investments overseas and joint resources development. Thirdly, it is working hard to disseminate clean technologies and environment-friendly products to cope with international moves to strengthen environmental restrictions.
In cooperation of the domestic steel industry, the government is making efforts to minimize trade conflicts with our trading partners by participating in consultative channels with them.
Q: Will you be specific about your ministry's mid- and long-term plan to develop the domestic petrochemical industry?
A: Despite its short history of 40 years, the Korean petrochemical industry has witnessed a brilliant growth to rank fifth in the global market. However, the industry is facing with new challenges, caused by environmental changes. Korea chalked up $20.8 billion worth of exports and produced 58 million tons of ethylene during 2005. China, accounting for 47 percent of Korean exports, is pushing up a self-sufficiency rate on a continuous basis through joint ventures with foreign companies. Countries in the Middle East have made massive facility investments by capitalizing on its strong point of cost competitiveness, emerging as our new rivals.
Early this year, the government announced the 2015 petrochemical industry development vision and strategy to tackle such challenges. The domestic petrochemical complexes are doing their utmost to raise productivity by maximizing efficient use of major products and by-products among oil refineries and petrochemical companies. It plans to encourage Korean petrochemical companies to build up overseas production bastions and diversify their exporting areas in a bid to reduce its excessive dependence on the Chinese market.
The government plans to activate a research body designed to develop the basic technologies of futuristic chemical materials for use in IT, BT and energy sectors. Korean petrochemical companies are turning to developing such alternative materials as olefin in a bid to stay away from the current naphtha-dependent structure.
The government plans to implement such steps to transform the domestic petrochemical industry into an environmentally friendly one through the development and dissemination of greenhouse gas reduction technologies and biodegradable products in an effort to comply with the international conventions on climate change. nw

Lee Tae-yong, director general of Main Manufacturing Industry Office from the Ministry of Commerce, Industry and Energy