Blockchain key to South Korea’s ‘powerhouse platform economy’
Hyper-connectivity and fintech included in list of key industries to receive strategic investment as part of $4.5 billion 'innovative growth' strategy
The South Korean government this week announced a “Growth Through Innovation” economic plan for 2019 that has earmarked 5 trillion Won (approximately $4.5 billion) to develop the country’s “platform economies” by making strategic investments into eight key industries.
These, according to the Ministry of Strategy and Finance, are hyper-connectivity, smart factories, smart farms, fintech, new energy, smart cities, drones and future cars.
A “platform economy” is one that develops infrastructure and technology essential for the concurrent growth of multiple industries, and South Korea is focusing on two such platforms. One is a supply chain for hydrogen fuel cells, while the other is a digital platform for promoting big data analytics, AI and blockchain technology to “ensure data management security and a boost in the sharing economy.”
Strategy and Finance Minister Kim Dong-yeon told an earlier media briefing that these platform economies are part of the government’s efforts to achieve “innovative growth” through regulatory reform. As the administration struggles to prevent the South Korean economy slipping into recession, innovative growth has been made one of the three pillars of President Moon Jae-in’s economic growth strategy, along with income-led economic growth and economic fairness.
“The platform economy is an ecosystem and infrastructure for future industries,” said the Strategy and Finance Minister. “We should become a platform powerhouse to lead the economy in the digital era. The world’s top five companies in market cap last year – Apple, Google, Microsoft, Amazon and Facebook – were all platform companies. You lag behind if you don’t lead in this game.”
This current round of platform economy investment has increased by 2 trillion won compared with 2018 and the government says it has committed to investing a total of 9-10 trillion won in the platform economies over the next five years.
“Innovation is creative destruction for the market,” added Kim Dong-yeon. “It is an omni-directional structural reform for the national economy. For innovative growth, we need to reform all social systems including education and the labor market, on top of regulatory reform.”
In a linked announcement also made this week, the southern island of Jeju said it has asked the Minister of Strategy and Finance to become a “special zone” for blockchain and crypto-currencies.
Jeju is home to a special freeport development zone and the island’s governor, Won Hee-ryong, said this relaxed and globally-focused corporate structure means it already has the framework to allow blockchain to flourish, but added that “drastic deregulation” is required first.