Federation of Korean Industries Chairman Ryu Jin delivers opening remarks at the second meeting of the Task Force for Strengthening Service Industry Competitiveness, held Monday at the Westin Chosun Seoul in Jung-gu, Seoul. [Yonhap]
Federation of Korean Industries Chairman Ryu Jin delivers opening remarks at the second meeting of the Task Force for Strengthening Service Industry Competitiveness, held Monday at the Westin Chosun Seoul in Jung-gu, Seoul. [Yonhap]

Business leaders and government officials are calling for the enactment of a basic law on service industry development to strengthen the competitiveness of South Korea's service sector.

The Federation of Korean Industries held a joint meeting Monday at the Westin Chosun Seoul between the government's Task Force for Strengthening Service Industry Competitiveness, chaired by Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol, and the FKI's Service Industry Competitiveness Enhancement Committee.

About 30 people attended, including FKI Chairman Ryu Jin, Deputy Prime Minister Koo, officials from the Ministry of Culture, Sports and Tourism, the Ministry of Agriculture, Food and Rural Affairs, the Ministry of Trade, Industry and Energy and the Financial Services Commission, as well as representatives from major business associations and member companies of the FKI committee.

In his opening remarks, Ryu said the service sector must be developed alongside manufacturing as a central pillar of the national growth strategy. "Upgrading the service industry is the core task for ushering in the New K-Industry era," he said.

He added that just as the Heavy and Chemical Industry Promotion Committee in the 1970s laid the groundwork for manufacturing growth, a basic law on service industry development must now serve as the institutional foundation for the sector's leap forward.

Deputy Prime Minister Koo said the framework for service industry development needs to be rebuilt from the ground up. "We must pursue bold regulatory rationalization through tools such as no-action letters that allow businesses to confirm in advance whether new ventures are permissible," he said.

Koo said the government would move quickly to prepare regulatory reforms to capture the emerging market for AI agentic commerce — where AI autonomously handles product comparison, ordering and payment — and would proactively build the institutional groundwork for new mobility services combining autonomous driving with automobiles and urban air mobility.

On behalf of the business community, the FKI's Service Industry Competitiveness Enhancement Committee submitted 20 proposals, including enactment of a basic law on service industry development, activation of financial support for K-content, expansion of tax credits for post-production work on video content, and revision of standard courier terms and conditions related to contactless delivery.

The committee said a basic law on service industry development — one that establishes a pan-government support framework — is needed to systematically nurture the sector and strengthen its competitiveness.

The committee also said tax incentives and other benefits should be expanded to attract more private investment into K-content policy funds. According to the National Assembly Budget Office, the investment utilization rate of the policy fund, which has a total size of 731.8 billion won ($475 million), has fallen steadily — from 53 percent in 2023 to 23.8 percent in 2024 and 10 percent in 2025.

The committee also proposed raising the ceiling on cultural completion guarantees issued by the Korea Technology Finance Corporation from the current 5 billion won to a maximum of 30 billion won, to help production companies secure financing for large-scale projects.

It further proposed that entities performing high-cost post-production work such as computer graphics and visual special effects be included among those eligible for the video content production tax credit.

The committee also called for clearer standards in standard courier terms and conditions for what constitutes completed delivery, reflecting the widespread adoption of contactless delivery, as a way to prevent disputes over liability for lost or damaged parcels.

Kwon Nam-hoon, president of the Korea Institute for Industrial Economics and Trade, said that as convergence between manufacturing and services — and among service sectors themselves — continues to expand, there is a need to move away from passive, prohibition-based regulation toward proactive institutional design aimed at promoting markets and managing externalities.


joze@heraldcorp.com