Question: Your committee covers the Ministry of Trade, Industry and Energy (MOTIE), the Small and Medium Business Administration (SMBA), and the Korea Intellectual Property Office (KIPO), as well as 19 government-invested enterprises and other public entities. How do feel as you’ve taken office as its chairman? Will you tell our readers how you plan to operate the committee and what major tasks the committee will have to handle?

Answer: The committee is charged with tremendous responsibilities and functions ranging from the nation’s industry and trade policies to SMEs, intrusions into mom-and-pop stores’ businesses, resources, and energy policies. It is a pleasure, but I also have a ton of heavy responsibility on my shoulders. 

Our committee handles three government agencies, MOTIE, SMBA, and KIPO; 12 public enterprises, including Korea Electric Power Corp. (KEPCO), Korea National Oil Corp. (KNOC), and Korea Gas Corp.; as well as 19 quasi-government bodies, including the Small & Medium Business Corp. (SBC), Korea Industrial Complex Corp. (KICOX), and KOTRA; and 21 public entities, including the Korean Standards Association (KSA). I want to make it a hard-working committee since it is loaded with pending issues related to a wide range of fields, including industry, trade, and energy. 

The committee is traditionally a bipartisan committee, not seen as being confronted with big differences between ruling and opposition parties. In line with these practices and tradition, I will operate the committee in a way that gives priority to the state and general public as well as the public’s livelihood. In particular, I endeavor to make the committee a place of discussion for smoother consensus by guaranteeing ample discussions on all the pending issues and communicating with each other. 

Among the major tasks the committee will have to carry out are SMEs’ establishment of win-win and cooperative ties with large-sized companies by ramping up the former’s competitive edge, departing from an industrial structure focusing on conglomerates. Mom-and-pop stores and traditional markets, directly linked to low-income people’s livelihoods, should be protected and nurtured to reinvigorate regional economies. 

The 7th power supply master plan is to be established. Solutions to the chronic issue of electricity shortages, plaguing the nation every year, should be developed, and public consensus on energy policies such as the safety of nuclear power units and public debate on spent nuclear fuel should be reached. 

Public enterprises’ indiscreet investments and lax management need to be watched closely, and the accountability of lax management should be made clear, and public enterprises need to be allowed to perform their own roles fully, rather than facing a one-sided, sweeping denunciation.

Regarding trade policies, countermeasures related to the opening of the Korean rice market should be taken as a grace period for the implementation of rice tarrifs is to expire (by the end of this year). The Korea-Australia Free Trade Agreement, Korea-Canada FTA, and Korea-China FTA that are under negotiations need to be examined to determine how much benefit they will bring to domestic industries and what damages the Korean agricultural and livestock industries will suffer.

Q: What are the most contentious issues the committee will act on during the second half of this year? Which one do you think should obtain approval: a measure on casinos for attracting foreign direct investments or a bill concerning the management and supervision of nuclear power businesses?

A:  Concerning a revision bill on the Act on Free Economic Zones, an enforcement decree on how to select foreigner-only casinos would change from the current case-by-case screening to a publicly-contested system. The issue will be put to an in-depth discussion from the perspective of attracting FDIs and the worry over a flood of casinos.

With regard to a measure to legislate an act concerning the management and supervision of nuclear power businesses, a principle of dividing nuclear power promotion and regulatory agencies should be observed. The wider the MOTIE’s regulatory power would get, the weaker the Nuclear Safety and Security Commission (NSSC) would be now that the NSSC, whose standing has been lowered to a vice minister’s level, comes under for fire for failing to carry out its roles. This seems to be an issue, to be discussed by experts from the perspective of the NSSC. 

Q: Controversy is mounting over the renewal of business areas reserved for SMEs, which is slated for between September and December, in line with the National Commission for Corporate Partnership (NCCP)’s policy of promoting shared growth between large- and small-sized companies. Some favor the enactment of a special act on designating business arenas considered suitable for SMEs, others are demanding the rescinding of the policy. Do you have any thoughts on those issues?

A:  Three years have passed since the introduction of the policy. Eighty-two business areas are now set aside as businesses suitable for SMEs. Now is the time when the outcomes the policy has achieved so far must be analyzed, and the policy needs to be revamped. Large- and small-sized companies are still at loggerheads in the fields of LED lights, recycled tires, and ‘black boxes’ in cars. 

The SME side demands the efficient implementation of the system amid worry that the government may scale it down in the name of the relaxation of regulations. 

First of all, the current system of protecting SMEs in accordance with an agreement reached among consultative bodies in the private sector needs to be kept intact. If a revision is necessary, the SBA should secure means to impose restrictions. Since the government raised a possible conflict with international trade norms at the time of the introduction of the system, a compromise was reached that a private body is to be charged with the implementation of the system. We now have to explore ways of enhancing the efficiency of designating business areas reserved for SMEs without falling into trade conflicts with foreign countries. 

Protecting and nurturing SMEs is not just an issue limited to Korea. Unlike the United States, European countries, including France and Belgium allow exceptions to the effect of protecting and nurturing SMEs in their trade agreements. 

Q: Are there any fields to which you, as chairman of the committee, will pay keen attention?

A: Dilapidated conditions of state-run industrial complexes need to be upgraded urgently in consideration of the competitiveness of provinces and SMEs. Shabby industrial complexes that are more than 20 years old make up 83 percent of the number of tenant companies and 80 percent in terms of the value of production. The problem is that these industrial complexes, designed to accommodate large-sized labor-intensive industries in the past, are now not suitable for the changing industrial structure based on small-sized advanced, knowledge-based industries. They are also suffering from weakened competitiveness stemming from outdated infrastructure as well as a shortage of daycare, sporting facilities, and parking lots, coupled with the younger generation’s unfavorable attitude toward SMEs. 

Four state-run industrial complexes in Changwon, Gumi, Banwol/Shiwha, and Daebul, designated as “innovative real estate” by MOTIE, are to be reinvented with intensive investments. Ordinary industrial complexes in provincial areas are in worse conditions. The government plans to include the ordinary ones in the designation of innovative industrial complexes starting the second half of the year. 

A measure to enact a special act on the updating and supporting of old industrial complexes and a revision bill concerning the facilitation of industrial concentration and factory installation have already been submitted to the National Assembly. I’m striving to have the pending bills approved by the National Assembly as soon as possible in order to address the woes facing the industrial complexes across the nation. Nineteen lawmakers hailing from areas where industrial complexes are located inaugurated a parliamentary forum to innovate industrial complexes this past April. 

Q: Chances are high that the Korea-China Free Trade Agreement could be concluded within this year following Chinese President Xi Jinping’s visit to Korea. What’s your position on the conclusion of the FTA, given it may benefit  cause Korean industries and damages to the domestic agricultural and livestock industries? 

A: Bilateral trade between Korea and China surged from 6.4 billion in 1992 to $270 billion in 2013, with an average annual growth rate of some 20 percent since the establishment of diplomatic ties in 1992. China has become Korea’s biggest exporting country and the nation’s biggest importing country. 

A statement issued at the end of talks between Korean President Park Geun-hye and Chinese President Xi on July 3 said Korea and China will work toward the conclusion of the FTA this year. Korea should focus on boosting national interests through FTA negotiations rather than deadline-pressed ones feared to end in a slipshod fashion, as former president Lee Myung-bak’s government did in the negotiations of the Korea-U.S. FTA.

The Korea Institute for International Economic Policy (KIEP) forecast that the real gross domestic product (GDP) will rise between 0.95 percent to 1.25 percent within five years after the Korea-China FTA takes effect and between 2.38 percent to 3.04 percent 10 years after. Now that the processing trade, in which unfinished goods are exported to China and then assembled and resold, has already been exempted from tariffs, the Korea-China FTA will not bring many benefits to Korea. FTAs with other advanced countries have so far brought great benefits to Korean automobile and other industries despite damages to the domestic agricultural and livestock industries. The Korea-China FTA negotiations should be done in a thorough manner due to some sensitive items not only in the domestic agricultural and livestock industries, but also in the Korean manufacturing industry.