I am glad to meet you. It has been two years since we set out to attain technological self-sufficiency in materials, parts and equipment industries in response to the sudden and unwarranted export restrictions by Japan. Despite the many concerns over the possibility of immense damage to Korea’s economy, our businesses and people have pulled together and managed to overcome that crisis. We have actually made it into an opportunity to dramatically raise the self-sufficiency of our materials, parts and equipment industries by increasing the domestic production of core items and diversifying import sources.
Today, I am very pleased to be able to share this achievement with the main actors who managed to turn a crisis into an opportunity. I extend my heartfelt gratitude to Korea International Trade Association Chairman Koo Ja-yeol and other business leaders who are joining us here.
Over the past two years, we have worked together in the spirit of mutual benefit and moved toward becoming an unshakable nation. What is more pleasing than anything else is the fact that we have gained self-confidence and learned how to cooperate; we found a success formula for surmounting a crisis.
Large businesses in need of materials, parts and equipment have joined hands with SMEs and middle-market companies. To localize core technologies rapidly, they have fully exerted their efforts together at every stage – from research and development to demonstration and mass production. The Government has also provided all possible support. Collaboration among government ministries and agencies has proceeded. Through a newly created special account for materials, parts and equipment, 5.8 trillion won will have been disbursed by the end of this year. A wider range of support has been put in place to reduce the time needed for approval and licensing and to speed up customs clearance. Our people have voluntarily subscribed to funds investing in materials, parts and equipment businesses, thereby financing and encouraging them.
The results are emerging in a much larger and more conspicuous way than was expected. Stable supply chains for three key items have been established. All three were key materials in semiconductor manufacturing that had been critically dependent on imports from Japan. Nearly 50 percent of our hydrogen fluoride supply used to be tied to Japanese imports. That number is now down to about 10 percent. When it comes to polyimide fluoride – after securing their own technologies, our companies have even begun to export it. EUV photoresist is also set to be mass-produced domestically with investments from a global company. Furthermore, for the 100 core items of greatest importance to domestic industries, our businesses’ dependence on Japan has fallen to as low as 25 percent.
SMEs and middle-market companies have played a truly remarkable role in this process. They have shortened the technology development period, which usually takes more than six years, to 18 months, thereby spearheading the rapid growth of the materials, parts and equipment industries. In just two years, the number of SMEs and middle-market companies – specializing in materials, parts and equipment – with a market capitalization of more than one trillion won has significantly increased to 31 from 13. The increase in sales for listed materials, parts and equipment businesses is also nearly double that of companies in other industries.
Now, relevant businesses in Korea are moving toward a greater goal. Based on the Materials, Parts and Equipment Strategy 2.0, we will foster 100 best businesses in these areas and create five specialized high-tech complexes, which will serve as global production hubs, to support Korean companies even more strongly as they take on challenges.
The experience and confidence from achieving self-sufficiency in the production of materials, parts and equipment became the foundation for overcoming the COVID-19 crisis. Even in the course of surmounting this crisis, we have relied on cooperation models between the Government and the private sector as well as between SMEs and large businesses. In addition, all our people have come together to set a global example in regard to epidemic prevention and control, and our economic recovery has been the fastest among the major developed countries. In particular, the manufacturing industry is leading all-time high exports, paving the way for a leap forward. This year, foreign direct investment also recorded its second highest first-half total ever, thanks largely to materials, parts and equipment and new industries.
Since last year, we have further strengthened that foundation to turn a crisis into an opportunity by pushing the Korean New Deal. The achievements in the materials, parts and equipment sector are becoming the driving force behind our moves toward a stronger economy. The world is paying attention to the Republic of Korea as core link in the global supply chain and partner in the post-COVID-19 great reconstruction.
Now, the Republic of Korea will stand tall as a pacesetting nation in the post-COVID-19 era. By accelerating the Korean New Deal, we will spearhead the digital and green economy and will lead international cooperation to stabilize the global supply chain based on the world’s best cutting-edge manufacturing capabilities for semiconductors and batteries and competitiveness in materials, parts and equipment. Building upon the world’s second largest biopharmaceutical production capacity, our position as a global vaccine production hub will be further solidified.
Over the past two years, we have proven the potential of the crisis-resilient Republic of Korea by enduring Japan’s export restrictions and the COVID-19 crisis one after the other. The Government does not believe that we should be self-sufficient in every area. Maintaining an international division of labor and global supply chain still remains important. The Government is also working on diplomatic solutions to Japan’s export restrictions.
However, during the COVID-19 crisis, we have also experienced the global supply chain’s shutdowns and production disruptions around the world. Even now, competition for reorganization of global supply chains is taking place across the world. The lesson we have learned is that we must become self-sufficient and reduce our dependence on certain countries for key materials, parts and equipment, while making the best of our strength in the global supply chain. This is the reason for establishing a more solid path toward self-sufficiency in materials, parts and equipment. I ask businesspeople like all of you here to be at the forefront of that path. The Government will do all it can to provide support.
Mutual benefit and cooperation are the Republic of Korea’s strengths that turn a crisis into an opportunity, and they are unique to our country. Let us all run more vigorously together toward a greater future.