'2027 Business Policy Recommendations' submitted to government, National Assembly

119 reform proposals across 10 sectors

'Fragmented rules across ministries risk losing market opportunities'

Space budget expansion, petrochemical decommissioning costs also flagged

The Federation of Korean Industries [Yonhap]
The Federation of Korean Industries [Yonhap]

The Federation of Korean Industries called for a consolidated legal framework to support physical AI, warning that fragmented regulations spread across multiple ministries — covering AI, robotics, autonomous driving and drones — could cause Korean companies to miss critical opportunities to establish market leadership.

The business lobby said Thursday it submitted its "2027 Business Policy Recommendations" to the government and the National Assembly on Monday and Tuesday. The document, compiled from feedback gathered at company sites, presents 119 reform proposals across 10 sectors, including the AI transition, advanced and energy industry competitiveness, and the labor market.

On AI, the federation called for an institutional foundation to support the physical AI ecosystem. Physical AI is widely regarded as a key technology for driving higher value-added manufacturing, but the relevant legal framework remains scattered across separate industry-specific laws covering AI, robotics, autonomous driving and drones. By contrast, major economies including China and Japan have already enacted local ordinances or established national strategies to actively foster the industry.

The federation urged the government to enact a foundational law for physical AI support and build out the broader institutional infrastructure. It said comprehensive support for the physical AI ecosystem should include designating and operating pilot zones, establishing an advanced performance certification system, and creating special exemptions for the use of personal and video data for AI training purposes.

The group also urged a larger budget for the space and aerospace sector, which the government is developing as a strategic industry. The launch of the Korea AeroSpace Administration has set the country on a path toward becoming one of the world's top five space powers, but South Korea's space budget stood at $600 million as of 2024 — no more than 0.8 percent of the United States' allocation.

The federation proposed that South Korea leverage its strengths as an IT manufacturing powerhouse to focus on satellite communications services and ground equipment, which together account for nearly 70 percent of the global space industry. It also called for expanding the transfer of state research institute technologies to the private sector and designating satellite and launch vehicle technologies as national strategic technologies.

In the energy sector, the federation called for government support to cover costs arising from the restructuring of the petrochemical industry. Decommissioning petrochemical facilities is far more expensive than dismantling ordinary factories because residual chemicals and hazardous materials must also be disposed of. The government is leading efforts to reduce petrochemical capacity and restructure the sector amid worsening conditions driven by global oversupply and Chinese production scale-ups, but the federation said there is currently no legal basis for subsidizing the demolition and environmental remediation costs of facilities being shut down.

On labor, the federation called for narrowing the scope of collective bargaining to exclude decisions on investment and workforce deployment. It said the revised Trade Union Act, which took effect in March, has created confusion on the ground by potentially subjecting "management decisions affecting working conditions" to bargaining and industrial action.

The federation urged that inherently managerial prerogatives — such as investment decisions, workforce deployment and workplace relocations arising from factory moves or new facility openings — be excluded from the scope of bargaining. It also said that rather than mandating a uniform extension of the retirement age to 65, the government should allow companies to choose their own approach, such as rehiring workers after retirement.

On taxation, the federation called for broadening the scope of a domestic production tax credit the government is seeking to introduce. It said the current government proposal covers only six sectors — solar, wind, secondary batteries, semiconductors, core materials and AI robot components — leaving other strategic items that meet the government's own selection criteria without any benefit.

"To revive private investment and innovation, we must quickly remove the obstacles companies face on the ground," said Lee Sang-ho, the federation's head of economic affairs. "We hope the business community's views will be actively reflected in the policymaking process of the government and the National Assembly, so that this year's economic growth momentum can be sustained into next year."


jeongwan@heraldcorp.com