Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol delivers opening remarks at the second meeting of the joint public-private task force on strengthening service industry competitiveness, held Sunday at the Westin Chosun Seoul in Jung-gu, Seoul. [Yonhap]
Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol delivers opening remarks at the second meeting of the joint public-private task force on strengthening service industry competitiveness, held Sunday at the Westin Chosun Seoul in Jung-gu, Seoul. [Yonhap]

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol said Sunday that the government must lay new groundwork for the service sector, calling for urgent legislation of a basic law on service industry development to concentrate support for research and development, taxation and financing.

Koo made the remarks at the second meeting of a joint public-private task force on strengthening service industry competitiveness, held at the Westin Chosun Seoul. "The world has entered an all-out national competition with everything at stake in the great upheaval of the AI revolution," he said, adding that boosting the competitiveness of the service industry — which accounts for 60 percent of gross domestic product — is the next priority alongside the government's three mega projects centered on semiconductors, AI data centers and physical AI.

"The service industry is entering a transformative period in which it converges with manufacturing through AI and drives innovation in public services, bringing sweeping change to everyday life," Koo said. "We must now establish a new institutional framework for the development of the service industry."

The government is pursuing the basic law because it has concluded that the service sector's growth is constrained by ministry-by-ministry regulation and a support system designed around manufacturing.

Autonomous delivery robots, for instance, fall under the separate jurisdictions of the Ministry of Land, Infrastructure and Transport, the Personal Information Protection Commission and the Ministry of Interior and Safety, while fractional investment in real estate and copyrights is overseen by the Financial Services Commission, the Ministry of Land, Infrastructure and Transport and the Ministry of Culture, Sports and Tourism. The government views this fragmented oversight — which also applies to content, retail and home-appliance subscription services — as an obstacle to nurturing new businesses.

The support system is also skewed toward manufacturing. While many service businesses such as hair salons and accommodation providers are managed primarily through regulation, financial support, R&D funding and export assistance are structured around manufacturers, making it structurally difficult for service companies to grow.

Through the basic law, the government plans to establish short- and long-term development plans, build integrated governance that breaks down silos between ministries, and rationalize regulation by using tools such as no-action letters that confirm the legality of new businesses in advance.

The second meeting of the joint public-private task force on strengthening service industry competitiveness takes place Sunday at the Westin Chosun Seoul in Jung-gu, Seoul, chaired by Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol. [Yonhap]
The second meeting of the joint public-private task force on strengthening service industry competitiveness takes place Sunday at the Westin Chosun Seoul in Jung-gu, Seoul, chaired by Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol. [Yonhap]

The government also plans to draw on overseas examples. Japan operates an Industrial Competitiveness Enhancement Act covering industry broadly, while the EU has its Services Directive. South Korea, by contrast, has framework laws for manufacturing, construction, agriculture and fisheries but none covering the service industry as a whole.

Alongside the basic law, the government is moving to accelerate the development of AI-driven new services. It plans to pursue regulatory reforms that allow the full shopping process to be piloted, with the aim of capturing an early lead in the "AI agentic commerce" market — where AI handles not just product recommendations but also comparison, ordering and payment. The government also intends to actively integrate AI into autonomous driving services for automobiles and urban air mobility, as well as public services covering taxation, national treasury and civil affairs.

The Korea Institute for Industrial Economics and Trade told the meeting that the service industry accounts for about 75 percent of domestic employment and roughly 57 to 60 percent of value added, and proposed three development strategies: boosting service exports, improving the quality and price competitiveness of domestic services, and taking a global lead in AI-based new services. The Korea Enterprises Federation also submitted 20 policy recommendations to the government, including enacting the basic law on service industry development, establishing guidelines for the use of copyrighted works in AI training, and expanding policy financing for content.


fact0514@heraldcorp.com