Service industry innovation

Ambitious strategy will get nowhere without action plans

The government unveiled a comprehensive strategy to innovate the nation's lagging services industries Wednesday. The five-year plan calls for drastically increasing financial and tax support and lifting regulations to nurture four promising services sectors ― tourism, health, logistics and content.

To turn the vision into reality, it will provide 70 trillion won ($60.5 billion) for the four areas and inject an additional 6 trillion won for research and development into the services sector by 2023. Also, the government will reduce income and corporate taxes by half for services startups in the first five years, and exempt other charges for three years. It is commendable the government has decided to expand financial and tax support for the services industry on a par with that for the manufacturing sector.

It has already relaxed various regulations hindering the services industry's growth. Most noticeable was the gradual easing of the nighttime online gaming ban on teenagers, while doing away with the payment limit of 500,000 won a month for adults. It will also speed up the permit process for a multibillion-dollar project to build a large theme park in Hwaseong, 60 km south of Seoul, while expanding the tax refund limit for foreign tourists from 1 million won to 2 million won.

These and other programs are welcome, albeit belated, given the country's lagging services sector. The industry's share of added-value creation stood at 59.1 percent of the total last year, far lower than in the U.S. (79.5 percent), the U.K. (79.2 percent), Japan (69.5 percent) and Germany (68.1 percent). The current situation is all the more pitiable because the fusion of high-tech manufacturing and new-concept services is emerging as a main growth engine for the Fourth Industrial Revolution.

The government's policy is going in the right direction but appears to be lacking in details. A vision and rough roadmap have come out, but practicable details have not. Previous administrations announced similar plans but failed to turn their words into actions because of the lack of practical, consumer-oriented details. We hope the latest blueprint will not follow their examples.