On July 14, 2020, South Korea’s President Moon Jae-in presented the official roadmap of the Korean New Deal, which aims to provide important impulses for the country's export-dependent economy amid the aftermath of the COVID-19 pandemic as well as to accelerate an all-encompassing nationwide digitalization of South Korea. In its finalized version, both the scope and scale of the Korean New Deal were expanded with planned combined government and private investments of 160.0 trillion KRW (130 billion CHF) and create 1.9 million new jobs over the period from 2020 and 2025. As the three core pillars of the ambitious project, the Moon government designated the Digital New Deal, the Green New Deal, as well as the strengthening of employment and social safety nets.
Key projects of the Korean New Deal
The projects pursued under the Korean New Deal by the government are divided into 28 tasks (12 digital, eight green, and eight involving a strengthened social safety net) in nine areas. Here, special emphasis is put on ten key projects for which the government allocates 43.4 trillion KRW (36 billion CHF) until 2022 with the aim to create 516,000 jobs. By 2025, the total investment is intended to reach 100.9 trillion KRW (91 billion CHF, of which KRW 68.7 trillion will come from government investment) and 1.1 million new jobs by 2025. Of special interest, the government aims to integrate data, 5G and artificial intelligence (AI) throughout all sectors by strengthening data collection, processing, and utilization through its “Data Dam” project, which also strongly ties into the push towards “Smart Healthcare” and the key project “Digital Twin”. Furthermore, the push towards decarbonization and expanding renewable energy production is shown in the Green New Deal core projects, focusing on “Green Remodeling”, “Green Energy Production” and “Eco-friendly vehicles” as well as “Green and Smart Schools” as a project converging between both pillars.
Opportunities for Swiss companies to take an active role
Overall, the goal of the mainly government-led projects is to kickstart a fundamental structural change of the Korean economy and society through a shift towards what the government coined “Smart Country” based on their DNA (Data, Network, AI) principle, while also pushing towards “Green Country” (Net-Zero Emissions). Accordingly, the government expects private investment as well as business cooperation to follow and expand on the foundations it develops. While the main goal of the Korean New Deal is on promoting domestic companies and on closing technology gaps, there exist therefore ample future opportunities for foreign companies to take an active role, including highly competitive Swiss firms with strong technologies and products with the seal of approval “Made in Switzerland” in areas related to the plan’s main tasks.
Recommendations for Swiss SMEs looking to take part
Swiss companies can benefit from a generally good investment climate in Korea as well as a stable political and legal framework that provides a solid basis for long-term investments and business activities. However, it must be stressed that, given the sometimes high expectations and demands of the Korean market and its stakeholders, Swiss companies are well-advised to follow a proactive approach with targeted market research and solutions tailored to Korean clients and partners in order to be successful. Although participation in public tender processes as in the case of the Korean New Deal is principle open for foreign companies, it is also recommended to consider partnering with Korean companies to avoid steeper hurdles in project participation to make inroads successfully into Korea by leapfrogging the Korean New Deal.