Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698928297666.pdf (South Africa)
Wednesday, 13 September 2023] No 118—2023] FIFTH SESSION, SIXTH PARLIAMENT PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA _____________________ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS _____________________ WEDNESDAY, 13 SEPTEMBER 2023 _____________________ TABLE OF CONTENTS ANNOUNCEMENTS National Assembly and National Council of Provinces 1.

Classification of Bills by JTM ....................................................................................... 2 National Assembly 1.

2.
2.

Removal by President of Public Protector from office .................................................. 2 Referral to Committees of papers tabled ........................................................................ 4 TABLINGS National Assembly and National Council of Provinces 1.

Minister of Forestry, Fisheries and Environment .......................................................... 4 2.
Minister of Justice and Correctional Services ................................................................. 4 National Council of Provinces 1 1.

Chairperson .................................................................................................................... 4 COMMITTEE REPORTS National Assembly 1.

2.
2.

Trade, Industry and Competition .................................................................................... 6 Trade, Industry and Competition .................................................................................. 29 National Council of Provinces 1.

Health and Social Services & Education and Technology, Sport, Arts and Culture .... 76 ANNOUNCEMENTS National Assembly and National Council of Provinces The Speaker and the Chairperson 1.
Classification of Bills by Joint Tagging Mechanism (JTM) (1) The JTM in terms of Joint Rule 160(6) classified the following Bill as a section 75 Bill: (a) Companies Amendment Bill [B27–2023] (National Assembly – sec 75).

National Assembly The Speaker 1.

Removal by President of Public Protector from office (a) Letter from the President of the Republic, regarding the removal from office of Adv Busisiwe Mkhwebane, in terms of section 194(3)(b) of the Constitution of the Republic of South Africa, 1996.
2 3 2.

Referral to Committees of papers tabled (1) The following paper is referred to the Portfolio Committee on Communications and Digital Technologies for consideration and report: (a) Corporate Plan of the South African Broadcasting Corporation for 2023/24 – 2025/26.
(2) The following papers are referred to the Portfolio Committee on Justice and Correctional Services: (a) Government Notice No R. 3690, published in Government Gazette No 49010, dated 21 July 2023: Amendment of Regulations pertaining to Judges’ Conditions of Employment: Judges’ leave, in terms of the Judges’ Remuneration and Conditions of Employment Act, 2001 (Act No 47 of 2001).
(b) Government Notice No R. 3691, published in Government Gazette No 49010, dated 21 July 2023: Amendment of Regulations pertaining to Judges’ Conditions of Employment: Judges’ allowances, in terms of the Judges’ Remuneration and Conditions of Employment Act, 2001 (Act No 47 of 2001).

TABLINGS National Assembly and National Council of Provinces 1.
The Minister of Forestry, Fisheries and Environment (a) Report and Financial Statements of the iSimangaliso Wetland Park Authority for 2022-23, including the Report of the Auditor-General on the Financial Statements and Performance Information for 2022-23.

2.
2.

The Minister of Justice and Correctional Services (a) Integrated Report and Financial Statements of the Legal Aid South Africa for 2022- 23, including the Report of the Auditor-General on the Financial Statements and Performance Information for 2022-23.

National Council of Provinces 1.


The Chairperson (a) Investigation in terms of section 106(1)(a) of the Local Government: Municipal Systems Act, 2000 (Act No 32 of 2000), read with section 9(1)(a) of the Western 4 Cape Monitoring and Support of Municipalities Act, 2014 (Act No 4 of 2014) on allegations of maladministration, fraud, corruption and/or any other serious malpractices within Central Karoo District Municipality, Western Cape.
Referred to the Select Committee on Cooperative Governance and Traditional Affairs, Water, Sanitation and Human Settlements for consideration.

COMMITTEE REPORTS National Assembly 5 1.
Report of the Portfolio Committee on Trade, Industry and Competition on the Department of Trade, Industry and Competition’s Fourth Quarter Financial and Non-Financial Performance for the 2022/23 Financial Year, dated 6 September 2023 The Portfolio Committee on Trade, Industry and Competition, having assessed the service delivery performance of the Department of Trade, Industry and Competition (DTIC), against its mandate and allocated resources, in particular the financial resources for the period 1 January to 31 March 2023, on 13 June 2023, reports as follows: INTRODUCTION For the 2022/23 financial year, the DTIC had set three strategic priorities, namely (i) Industrialisation by drawing the link between interventions and patterns of production, investment, exports and job creation; (ii) Transformation by connecting interventions to empowering black South Africans, women and workers; and (iii) Capable state by reporting on improved performance and deeper partnerships.
During the fourth quarter of the 2022/23 financial year, there had been a 1,4 percent increase in overall manufacturing production amidst the ongoing electricity challenges.

However, South Africa’s exports of commodities and manufactured products have been facing challenges due to global recessionary pressures.

Despite this economic context, the DTIC had achieved 97,4 percent of its targets in the fourth quarter and spent 98,9 percent of its projected budget at the end of the 2022/23 financial year.

1.1.
1.1.

Mandate of the Committee Section 5 of the Money Bills Amendment Procedure and Related Matters Act (No.

9 of 2009) requires the National Assembly, through its committees, to annually assess the performance of each national department over an 18-month period.

This culminates in a committee submitting a report of this assessment known as a Budget Review and Recommendation (BRR) Report.
The overarching purpose of the BRR Report is for the committee to make recommendations on the forward use of resources to address the implementation of policy priorities and services, as the relevant department may require additional, reduced or re-configured resources to 1 6 achieve these priorities and services.

This Act gives effect to Parliament’s constitutional powers to amend the budget in line with the fiscal framework.
The current process forms part of ongoing oversight of the DTIC’s financial and non-financial performance.

This will inform the next BRR process.

Furthermore, Parliament’s Annual Performance Plan (APP) requires submission of reports on departments’ quarterly performance.

1.2.
1.2.

Purpose of the Report The purpose of this report is to monitor the financial and non-financial performance of the DTIC against its predetermined objectives and quarterly milestones as part of the Committee’s ongoing budgetary oversight.

This report assesses the non-financial and financial performance for the fourth quarter of the 2022/23 financial year, namely from 1 January to 31 March 2023.

1.3.
1.3.

Method The Committee was briefed by the DTIC on its fourth quarter performance for the 2022/23 financial year on Tuesday, 13 June 2023.

1.4.

Outline of the contents of the Report Section 1 of the report provides an introduction to the report including its purpose, and method.
Section 2 outlines the DTIC’s strategic objectives, assesses its financial and non-financial performance against its APP for the 2022/23 financial year from 1 January to 31 March 2023 and Section 3 outlines the key issues raised by the Committee during deliberations.

Section 4 provides the Committee’s concluding remarks followed by a note of appreciation in Section 5.

DEPARTMENT OF TRADE, INDUSTRY AND COMPETITION 2.1.


Strategic Goals The DTIC’s performance was in line with its strategic objectives, which guided its work and was aligned to its programmes.
The strategic goals were as follows1: 1 DTIC (2022) 2 7 • Promoting structural transformation, towards a dynamic industrial and globally competitive economy; • Providing a predictable, competitive, equitable and socially responsible environment, conducive to investment, trade and enterprise development; • Broadening participation in the economy to strengthen economic development; • Continually improving the skills and capabilities of the department to effectively deliver on its mandate and respond to the needs of South Africa’s economic citizens; • Coordinating the contributions of government departments, state entities and civil society to effect economic development; and • Improving alignment between economic policies, plans of the state, its agencies, government’s political and economic objectives and mandate.
2.2.

Overview and assessment of the financial and non-financial performance2 This section provides a comparison between the DTIC’s fourth quarter non-financial performance targets as outlined in its APP against its fourth quarter performance report for the 2022/23 financial year and outlines its financial performance for the period under review.

2.2.1.

Non-Financial Performance The DTIC had 151 targets for this quarter, four of which had not been achieved.
This represented a 97,4 percent achievement of targets during the quarter.

This was an improvement from the 93 percent achievement of targets in the third quarter.

The four targets that had not been achieved were: • The publishing of three draft regulations on anti-dumping, safeguard measures and on tariff investigations.

While the three draft regulations had been prepared, these had not yet been approved for publication.
• The submission of the draft bill on patents and its full explanatory memorandum to the Executive Authority and taking it through the Economic Sectors, Employment and Infrastructure Development (ESEID) Cluster.

While the draft Bill had been submitted to and approved by the ESEID Cluster, it had not yet been approved for publication.

• The submission of the draft bill on designs and its full explanatory memorandum to the 2 DTIC (2023) 3 8 Executive Authority and taking it through the ESEID Cluster.
While the draft Bill had been submitted to and approved by the ESEID Cluster, it had not yet been approved for publication.

• The publication of the National Energy Vehicle (NEV) roadmap.

The draft roadmap had been presented to the ESEID Cluster and was undergoing ongoing engagement with the National Treasury on a funding model.

The DTIC reported on the various areas of its work.

Highlights of its performance in this regard are outlined below: 2.2.1.1.
Energy interventions In terms of the DTIC Group’s energy interventions, the Minister reiterated that they would be supporting the wider effort to address the energy challenges.
During the quarter under review, they had: • Supported new energy generation projects by implementing measures such as unblocking and promoting investment, as well as addressing regulatory challenges; • Assisted firms with adaptation strategies such as the energy resilience scheme; • Promoted longer term energy efficiency in the economy through technical standards work; and • Promoted industrialisation to ensure that South Africa could develop security of supply of components and create jobs in the process.
2.2.1.2.

Industrialisation The DTIC mobilises incentives through the fiscus and partnerships with the private sector to enable structural transformation and support to firms to enhance their competitiveness.

In addition, it has a range of non-financial support schemes, ranging from rebates on duties, to trade tariff support and actions by the competition authorities and development finance institutions to support firms.
In the automotive sector, 140 455 units, including passenger cars, light motor vehicles and medium and heavy vehicles, had been produced during the quarter.

This was a decrease of 2,2 percent compared to the previous quarter.

This was attributed to a decline in new domestic vehicle sales and exports in the previous quarter, as well as the loss of units by Toyota due to 4 9 flooding.
However, overall vehicle production from April 2022 to March 2023 had increased by 10,6 percent with 548 536 units being produced compared to 495 860 units in the previous year.

In terms of investments, R107,4 billion in new investment pledges had been secured against a target of R120 billion for the 2022/23 financial year.

The DTIC Group had also received commitments and/or achieved R20,9 billion worth of additional local output from industry.
In terms of local public procurement, a Constitutional Court judgment had set aside the 2017 Preferential Procurement Regulations (PPRs).

Subsequently, the 2022 PPRs do not make local content a compulsory tender requirement and leave it to the discretion of organs of state.

In response, the DTIC has had ongoing engagements with key organs of state procuring products designated for local content to ensure that the policy is not discarded in their tenders.
The key outcomes of this advocacy during the fourth quarter have been the issuing of the following Request For Proposals (RFPs) and Request for Information (RFI) with local content requirements: • Transnet Freight Rail’s (TFR) RFPs for the maintenance of their staged locomotives; • TFR’s RFP for manufacture and supply of rail fastening system for a period of two years; and • Airport Company of South Africa’s RFI requesting information on local industrial capacity and capabilities to manufacture and supply 955 steel airport luggage trolleys and 4 roll tainers.
Furthermore, the Export Credit Insurance Corporation (ECIC) has enabled the procurement of R54,6 million worth of South African goods and services during the fourth quarter.

This was linked to four insurance cover projects where the ECIC has minimum local content requirements for goods and services that applicants must meet to receive insurance coverage.
South African products procured included Electrical Materials and Equipment; Building Materials, Tools and Equipment; Steel Products; Surveying Equipment; Jointing Materials; Air conditioner and Ventilation Equipment; and Steel Covers.

In terms of Special Economic Zones (SEZ), the Minister reported on progress made at the Coega SEZ, Richards Bay Industrial Development Zone (RBIDZ) and East London IDZ 5 10 (ELIDZ).
Coega SEZ had secured investors with a combined capital investment of R892 million against a target of R110 million.

This was largely attributed to the following Agro processing, Manufacturing, and Logistics investment projects, namely: • CEMZA, a cement product manufacturer, would be investing R100 million for its expansion.

The expansion of the current facility would include a warehouse, plant and equipment, which would create an additional 25 operational jobs and 50 construction jobs.
• San Miguel had signed a Lease Agreement for a ready-to-occupy facility for the processing of citrus.

It would be investing R492 million.

Further development of the processing facility would include refrigeration and freezing facilities, which would create 112 operational and 50 construction jobs.

• Vanguard had signed a Lease Agreement for a storage and repairs facility within Zone 2 of the Coega SEZ.

The project’s investment value was estimated at R300 million.
The RBIDZ had attracted two key investments, namely: • Wilmar Processing SA (Pty) Ltd, which had been a pledged investment.

It has operationalised phase 1 of its Palm Oil Processing Plant, which was valued at an estimated R1,2 billion creating 21 new permanent jobs in the fourth quarter.

A total of 202 permanent jobs were expected to be created once the plant is fully operational.

• ProStar Export Paint is a 100 percent black-owned project, with a total investment value of R141 million.
The project was at construction stage with piling having been completed and the foundation being finalised.

The DTIC had approved top-structure funding of R41,2 million in this regard.

The ELIDZ had operationalised two investment projects namely: Bushveld Electrolyte (Chemicals Sector) with an investment of R400 million and Permalox Pepkor (Logistics Sector) with an investment of R70 million.

The total value of operational investments in ELIDZ is R5,8 billion.
These new investments have created 885 new direct jobs bringing the cumulative jobs to 4 663.

During the quarter, the DTIC Group enabled R6,1 billion worth of incentives, cumulatively R30,3 billion worth of incentives for the financial year.

It had disbursed R4,1 billion during the fourth quarter and a total of R26,2 billion over the financial year.
The funds directly 6 11 administered by the DTIC Group had benefited projects in 49 of the 52 municipalities, of which 41 had been largely rural district municipalities.

Finally, there had been R178 billion worth of manufactured exports during the quarter.

The DTIC noted that exports to the rest of Africa for the 2022/23 financial year, as well as exports to non-traditional export regions beyond Southern Africa, had increased significantly.
In the third quarter, these included ferroalloys (R24,8 billion); light trucks (R18 billion); cosmetics (R3,2 billion); and steel bars and rods (R2,2 billion).

The DTIC programmes and/or entities had supported R24,34 billion worth of exports in the fourth quarter.
This was attributed to the (i) provision of import duty rebates and drawbacks of customs duties for local manufacturers (R18,8 billion); (ii) provision of industrial financing for industrial projects, including manufacturers that exported their products (R1,2 billion); (iii) exhibitions and missions funded by the DTIC (R9,4 million); (iv) orders secured as a result of insurance risk cover provided for export transactions and outward investment projects with South African local content procurement requirements (R54,6 million); and (v) services exports supported through the financing of Global Business Services (projects, including call centres) (R2,8 billion).
2.2.1.3.

Jobs, ownership and transformation According to Statistics South Africa, employment in manufacturing declined by 2 000 jobs during the fourth quarter, and the total employment in manufacturing was 1 654 000 persons, which was an increase of 75 000 year-on-year.

The DTIC highlighted that an estimated 614 457 workers were covered by the seven masterplans coordinated by the DTIC.

In addition, about another 383 000 new or existing jobs had been supported by its incentive programmes.
One of these programmes was the Social Employment Fund (SEF), which is overseen by the DTIC and administered by the Industrial Development Corporation (IDC) and forms part of the Presidential Employment Stimulus launched in October 2020 as part of the Economic Reconstruction and Recovery Plan.

At 31 March 2023, the SEF had created 65 033 jobs against a target of 50 000 jobs as set by the President.
This was due to more applications having been received than anticipated, as well as a low drop-off rate of participants.

7 12 In terms of worker ownership in approved mergers, six mergers had been approved in the fourth quarter where the Minister’s intervention had advanced worker ownership.

This had affected 9 509 workers.

A further 542 workers had benefited from worker ownership in other mergers approved by the Competition Commission.
Furthermore, of the 52 merger notifications received in the quarter, there had been 12 mergers that the DTIC had participated in based on public interest considerations and 13 large and intermediate mergers decided on by Competition Authorities.

2.2.1.4.

Innovation and Technology, Skills Development and Competitiveness Enhancement Programmes The DTIC develops and implements policies and instruments that support technology development, commercialisation and industrial innovation for competitiveness.
This was done through providing a platform for innovators to get support, share knowledge and best practice from the different role players in the National System of Innovation.

For the period under review, two Innovation workshops had been held in the Free State Province (Bethlehem and Ficksburg) on 14-15 March 2023.

The objective of the workshop had been to share information about the programme and the incentives of the DTIC.
Participants included entrepreneurs, science and technology students, and existing innovators/inventors.

In addition, the Grassroots Innovation Facilitation Project targeted Rural and Township designated groups to uncover innovation and facilitate pipeline development for the incentives.

The first targeted province had been Limpopo.


Furthermore, the fourth Intellectual Property and Technology Commercialisation Colloquium had been hosted on 28-29 March 2023 in partnership with the North West University, the Companies and Intellectual Property Commission (CIPC) and the National Intellectual Property and Management Office (NIPMO).
The DTIC also partners with the private sector and Sector Education and Training Authorities (SETAs) to promote more responsive skills and competitiveness to support and advance employment, industrialisation, economic transformation, trade and investment.

In this regard, it has a number of skills development programmes, such as the: • Itukise Internship Programme: A flagship internship programme for unemployed 8 13 graduates.
It provides unemployed graduates and in-service trainees with relevant work experience through a 12-36 months’ internship in DTIC-supported companies to promote placement into permanent jobs.

The programme is mostly funded by the National Skills Fund, which is part of the Department of Higher Education and Training.

The DTIC sources internship placements for unemployed graduates in companies and pays the stipend of placed graduates.
In the 2022/23 financial year, the programme had been accessed by 45 female interns out of a total of 78 participants.

• Textile Centre of Excellence (TCOE): The DTIC set up a textile state-of-the-art laboratory for the Council for Scientific and Industrial Research (CSIR) to conduct textile and materials research, host doctoral students and fund undergraduates at tertiary institutions specialising in textile and clothing research to improve the pipeline of graduates.
• Fashion Design Innovation Centre: It is a sub-project of the TCOE with a fully-fledged training workshop to develop the design capabilities of fashion design graduates from institutions in the Eastern Cape and to train on the latest computer-aided software The TCOE also provides quality assurance training on materials for fashion designers.

For the 2022/23 financial year, 75 students and youth had received financial support (51 students, nine fashion designers and 15 seamstresses).
• Intsimbi Future Production Technologies Initiative (IFPTI): This is a national, multi- stakeholder initiative, established under the DTIC and Industry through the Production Technologies Association of South Africa.

The Programme is industry-driven, and designed and implemented through a partnership model that meets the requirement for integrated On-the-Job Training in industry-based factories in close cooperation between training institutions and the factory floor.
Qualification accreditation is based on a two- pillar approach where qualifications are built, based on industry needs in a matrix structure of employable skills competencies which can lead to international and/or South African registered and accredited qualifications.

The initiative has four state-of-the-art training facilities in four provinces with advanced manufacturing training capacity and accredited Trade Assessment centre capacity.
There had been 163 students in the Tooling Machinist and/or Toolmaker Apprenticeship Programme in the fourth quarter, of which 87 percent were African and 45 percent were female.

In terms of building enterprise productivity and competitiveness, the DTIC facilitates the implementation of workplace transformation initiatives by training managers and their 9 14 employees to adopt world-class productivity enhancement best practices.
The Workplace Challenge is administered by Productivity South Africa in this regard.

During the 2022/23 financial year, 57 women out of a total of 101 participants accessed the Programme.

2.2.1.5.

Masterplans The DTIC is implementing seven Masterplans through the deployment of various industrial policy tools and industry commitments to develop industry capacity, increase investment and localisation, expand exports, and preserve and grow jobs.
These are for the following sectors and/or industries: (i) Retail Clothing, Textiles, Footwear and Leather (R-CTFL); (ii) Sugar; (iii) Poultry; (iv) Automotive; (v) Steel and Metal Fabrication; (vi) Global business services (GBS), and (vii) Furniture.

In terms of the R-CTFL Masterplan, the following achievements had been recorded in the fourth quarter, namely: • Pledged investments of R369 million and approvals disbursed to 36 CTFL industry clients to the value of R210 million.
• Sixteen black-owned businesses supported with R191 million, eight women-owned businesses supported with R79 million, and three early-stage start-ups supported with R14 million.

• 197 jobs had been created.

• 38 Customs Duty Rebate Permits had been issued for Woven Fabrics worth R375 million to produce garments with a value of R1,1 billion.

• SARS had seized 207 consignments with a value of R142 million in support of customs fraud prevention efforts.
In terms of the sugar industry, the following achievements had been noted: • The South African Sugar Association had reported sugar sales of 1 563 228 tonnes in the 2022/23 financial year, an increase of 315 946 tonnes, which exceeds the Masterplan’s targets of an additional 300 000 tonnes sourced from the local market.

• The interim sugar rebate mechanism has been extended to 24 November 2023 pending a long-term solution.
This is a transport rebate granted to importers in Botswana, Lesotho and Namibia to reduce the burden of transport costs from producers in South Africa and eSwatini.

10 15 • A Premium Price Payment had been developed as an interim measure, to stabilise Small Scale Growers, with a minimum premium of R60 million per annum being allocated for the 2021/22, 2022/23 and 2023/24 financial years.

The last tranche had been allocated to growers in January 2023.
• R1 billion had been allocated over a five-year period towards the Transformation Fund and had been disbursed as follows: for the 2022/23 financial year, R215 million had been allocated as at the end of March 2023.

In terms of the poultry industry, the following achievements had been noted: • The three-year target to increase the production of broilers by 1,7 million birds per week or 20,4 million birds per quarter had been exceeded.
The industry had produced 2,8 million birds per week or 33,6 million birds per quarter in the fourth quarter.

• The three-year target to increase the amount of Broiler Feed consumed by 300 000 tonnes or quarterly feed consumed of 74 122 tonnes had been exceeded.

Broiler feed consumed had increased by 380 564 tonnes from 2 674 204 tonnes in the 2019/20 financial year to 3 054 768 tonnes in the 2022/23 financial year.

• The IDC had approved funding of R525 million since inception in 2021.
It had approved R179 million in the 2022/23 financial year with R332,5 million of approved funding having been disbursed in the 2022/23 financial year and R182,8 million had been disbursed in the fourth quarter.
In terms of the automotive industry, the following achievements had been noted: • 140 455 vehicles had been produced in the fourth quarter; • 84 774 vehicles had been exported in the fourth quarter; and • The Automotive Industry Transformation Fund had approved two transactions and supported the entities with capacity building.

The approved transactions were upstream (logistics and lubricants) with a combined value of R54 million in loans and 140 jobs had been created and retained.
In terms of the steel and metals fabrication industry, the following achievements had been noted: • A number of Trade Measures had been concluded in the fourth quarter including (i) Anti- dumping duties on various garden tools (spades, shovels, forks, picks and racks) from 11 16 China and India; (ii) An anti-dumping duty application on welded link chains had been rejected due to insufficient evidence; and (iii) SARS had imposed provisional duties of 35,9 percent against imports of coated steel coils from China for six months, while the investigation was being finalised.
• The IDC had administered the Downstream Steel Industry Competitiveness Fund.

It had approved R138 million in industrial financing support for investments of R149 million, supporting 374 existing jobs and creating 52 new jobs.

It had disbursed R40 million to previously approved projects worth R128 million.

• The private sector Steel Fund was being administered by the South African Iron and Steel Institute.
This was established to be capitalised by a R2 per ton levied on locally produced steel from local steel mills.

In terms of GBS the following achievements had been noted: • 52 000 jobs had been created in the sector.

• 29 000 jobs had been created or retained by the GBS projects which is an increase of 7 000 new jobs from the last financial year for GBS incentivised projects.

• 82 percent of jobs supported were for youth.

• 63 percent of jobs supported were for women.


• R7,9 billion services exported to the European Union, United Kingdom, United States of America (USA), Australia and New Zealand.

In terms of the furniture industry, the following achievements had been noted: • The FX Group had commissioned a 4,5 megawatt woody biomass-fed steam turbine power plant in October 2022 to run its particle board, sanding, and melamine lines.

The plant was in production in the fourth quarter.


• In 2022, the IDC and the DTIC had committed R400 million towards the Furniture Challenge Fund.

In the quarter, 44 applications had been received, totalling R620 million and were at various stages of review.

The DTIC was in robust engagement with the IDC on the need to considerably accelerate the pace of processing and disbursements under the fund.
• To address the shortage of raw materials in the Furniture sector, PG Bison’s eMkhondo plant was expanding to provide an additional 800m3 per day of Medium Density Fibre to 12 17 the market.

R217 million had been spent on civil works which commenced in the quarter.

355 construction jobs had been created and employed from the community.

17 permanent jobs have been created.

2.2.1.6.


Regulation The Minister highlighted the following regulatory activities conducted by the DTIC: • Gazetted the greylisting regulations for public comment in March 2023.

The regulations are aimed at knowing who the shareholders of companies are.

In this regard, the CIPC would be monitoring the beneficial ownership data from companies.
• The Minister had approved the publishing of The Cape Flora, a logo application to protect a wide range of fynbos species as uniquely South African, in February 2023.

• The Minister had gazetted for public comment the application made by the South African Reserve Bank (SARB) to prohibit the use of images of certain pre-Reserve Bank era coins in terms of the Merchandise Marks Act in February 2023.

Currently, these images on the coins are unprotected.
This matter concerns national heritage and would give the SARB rights to prevent the replication of these coins.

A report in this regard was expected to be finalised in June 2023.

• In terms of public outreach, there had been education and awareness programmes in 11 local municipalities in North West, Northern Cape, Western Cape and Kwazulu-Natal provinces.
This had been a collaboration between the CIPC, the National Gambling Board, the National Lotteries Commission, the National Consumer Commission, and the National Credit Regulator to educate communities on consumer, companies, credit, lotteries and gambling laws.

There had been 578 community participants in these programmes.
2.2.1.7. International trade and investor engagements The Minister had either hosted or participated in the following bilateral engagements during the fourth quarter: • South Africa-Uganda State Visit and Business Forum in February 2023; • South Africa-Tanzania State Visit and Business Forum in March 2023; • Belgium Business Forum and Bilateral Meeting in March 2023; • The United Arab Emirates (UAE) Ministerial and Business Forum; • Tenth Session of the Joint Economic Committee between Switzerland and South Africa; 13 18 • Fifth South Africa Philippines Bilateral Consultative Forum; and • Seventeenth Session of South Africa Russia Inter Governmental Committee on Trade and Economic Cooperation.
The Minister and/or the DTIC had either hosted or participated in the following multilateral engagements during the fourth quarter: • The 11th Meeting of the African Continental Free Trade Area Council of Ministers held in Gaborone, Botswana on 11-12 February 2023.

• The 36th Ordinary Session of African Union Heads of State and Government held in Addis Ababa, Ethiopia on 18-19 February 2023 (African Union (AU) Summit).
• World Economic Forum in Davos, South Africa hosted the South African Country Dialogue Session: The South African Investment Case.

This was attended by over 100 Global and South African Chief Executive Officers.

Furthermore, Bilateral Meetings were held with Saudi Arabia, Mozambique, the USA and the United Arab Emirates, and several private sector meetings were hosted.

A World Trade Organisation Ministerial Meeting also formed part of the itinerary.
• The 2023 Investing in Africa Mining Indaba, which included bilateral meetings with the USA and Japan, and investor meetings.

2.2.2.

Financial Performance The DTIC’s budget had been adjusted during the Adjusted Estimates of National Expenditure from R10,87 billion to R10,91 billion.

By the end of the fourth quarter, the DTIC had spent R10,8 billion of its R10,9 billion adjusted budget.

This translated to an expenditure of 98,9 percent for the financial year.
Overall under-expenditure had therefore been R115,1 million (1,1 percent) of the total budget.

As shown in Table 1 below, under-expenditure had mainly been in the following programmes: • Programme 6: Industrial Financing (R48,4 million or 0,89 percent), • Programme 1: Administration (R35,4 million or 4,4 percent), • Programme 8: Invest South Africa (R12,9 million or 18,6 percent), and • Programme 3: Spatial Industrial Development (R6,7 million or 4,4 percent).
14 19 Table 1: Fourth Quarter Expenditure by Programme as at 31 March 2023 Programme (R’000) 1: Administration 2: Trade Policy 3: Spatial Industrial Development 4: Industrial Policy 5: Consumer and Corporate Regulation 6: Industrial Financing 7: Trade and Investment South Africa 8: Invest South Africa 9: Competition Policy 10: Economic Research Total Source: DTIC (2023) Adjusted Budget 2022/23 Year-to-date Actual Expenditure % Variance 2.2.3.
Fourth Quarter Expenditure by Economic Classification In terms of economic classification, the largest under-expenditure item had been for incentive payments with an underspending of R48,3 million or 0,9 percent of its budgeted amount.

Compensation of employees had also incurred an underspending of R35,2 million or 3,3 percent of its budgeted amount.
Table 2: Fourth Quarter Expenditure by Economic Classification as at 31 March 2023 Description (R’000) Budget 2022/23 Year-to-date Actual Expenditure % Variance Current payments Compensation of employees Goods and services Transfers and subsidies Incentive Payments Department Entities External Programmes Non-Profit Organisations (Partnerships with business associations, NEDLAC) Membership Fees (International Organisations) 41 173 35 009 14,97 15 20 Description (R’000) Households Payments for capital assets Payments for financial assets Total Source: DTIC (2023) Budget 2022/23 Year-to-date Actual Expenditure % Variance 10 273 13 074 1 501 9 961 4 119 1 191 10 913 553 10 798 435 3,04 68,49 20,63 1,05 ISSUES RAISED DURING THE DELIBERATIONS The following issues relating to the performance of the DTIC were raised during the Committee’s deliberations: 3.1 Mergers and the impact on employment: The Committee welcomed the recent Mediclinic Merger, and the Heineken, Distell, and Namibian Brewery Merger.
The merger of Heineken, Distell, and Namibian Brewery secured significant investment, resulting in 80 percent of input sourced locally, as well as investment in a new greenfield brewery and maltery, among others.

In addition, to promote agriculture, research and development (R&D), and black-owned, women-controlled businesses, it shall support and invest in Small and Medium Enterprises, including Historically Disadvantaged Person controlled suppliers.
In relation to the Mediclinic Merger, it led to investment in skills development of training nurses, as well as providing medical grants to support development at different Mediclinics.

Additionally, it would result in a R5 billion spend on procurement from black-owned business, of which R2,5 billion would be used to procure from black-owned Exempt Micro Enterprises.

Furthermore, both mergers resulted in the establishment of Employee Share Ownership Plans.
Notwithstanding these achievements, the Committee enquired whether any of these mergers had resulted in job losses.

The Minister informed the Committee that regarding mergers, South African Competition Law diverged from international competition law.

In general, employment is not covered under competition law internationally.

Globally, opportunities to bring synergies to increase efficiency and a company’s overall performance drive mergers.
However, the South African Competition Act provides a broader framework that includes the impact on employment.

16 21 According to the Minister, job losses had been minimal during mergers, however, this was dependent on whether a failing company was involved.

In circumstances like that, the Competition Authorities would be more concerned with preventing the company from going out of business completely and less concerned with the number of retrenchments.
In light of this, they might allow a merger without imposing stringent employment conditions, but such mergers are uncommon.

However, the majority of mergers in South Africa include very strong job protection measures.

The presentation reflected that 178 000 jobs had been covered by competition measures.

Companies would not be permitted to reduce the total number of employees in the business, as a result of a merger.
For example, if after a merger a company had two chief financial officers (CFO), one of the CFOs might be promoted to another Senior Level position; or if one CFO resigns, a company may employ someone at a lower level.

The Minister informed the Committee that given South Africa’s unemployment challenges, few merger agreements had very specific retrenchment clauses.
3.2 Fronting: Although fronting has been made a criminal offence in terms of the Broad- Based Black Economic Empowerment (B-BBEE) Act of 2013, the practice of fronting still prevailed.

As government had been a major procurer of goods and services, the Committee enquired what steps had been taken to address this, and what consequence management had been implemented in this regard.

The Minister indicated that fronting was a concern for the DTIC.
With the strengthening of the B-BBEE Commission, it would be able to flush out examples of fronting.

According to the Minister, the challenge was with ensuring enforcement of the Act rather than the regulatory side, thus more enforcement was also necessary to complement the work of the Commission.
3.3 New public procurement legislation: National Treasury has indicated that it would be tabling the Public Procurement Bill that seeks to regulate and prescribe a framework within which preferential procurement must be implemented.

The current public procurement system is fragmented, decentralised and open to corruption, hence, the bill seeks to establish a single regulatory framework, with a single point of authority in a Public Procurement Office.
In light of the new draft legislation, the Committee enquired how it would impact the Black Industrialist Programme.

The Minister informed the Committee that the DTIC has an interest in the proposed legislation as it relates to 17 22 transformation.

Therefore, it would continue to collaborate with National Treasury to ensure that the proposed legislation does include provisions that would ensure effective transformation.
3.4 Status of implementation of the National Credit Amendment Act (NCAA): In the previous Parliament, the Committee had adopted the National Credit Amendment Act of 2019.

This Act seeks to provide additional protection to low-income consumers from being over-indebted by either re-arranging, suspending or cancelling (partially or wholly) their unsecured credit debts within a period of four years from the commencement date, which can be extended.
The Committee enquired about the status of the implementation of the NCAA.

With regard to the implementation of the National Credit Amendment Act, the Minister informed the Committee that it would engage the National Credit Regulator to ascertain how far along the implementation process was.
3.5 Provision of requisite skills for industrialisation: There was a need for greater collaboration between the relevant educational institutions to guarantee the development of the necessary skills required for industrialisation.

This would ensure that a comprehensive strategy for advancing industrialisation could be developed and implemented.
The Committee enquired whether there were any relationships between the DTIC and institutions of higher learning that would ensure the development of the necessary skills for further industrialisation and economic transformation.

The Minister highlighted that innovation and new ideas typically emerged in the early stages of industrialisation.

This creativity and new innovations could result in the creation of brand-new products, or they might serve to improve existing products.
Regarding the DTIC’s partnerships with academic and research institutions, the Minister emphasised the work with the CSIR to establish a cutting-edge textile laboratory for conducting textile and materials research, to host PhD students, and to provide funding for undergraduates at tertiary institutions that specialise in textile and clothing research to increase the pipeline of graduate students.
The Minister also informed the Committee that the Colloquium on Intellectual Property and Technology Commercialisation with the theme “Advancing innovation through IP commercialisation for full scale industrialisation” had been held on 28 and 29 March 2023, in collaboration with the North West University, the CIPC, and NIPMO.

He further indicated that future quarterly 18 23 reports would go into greater detail about the DTIC’s collaboration with various institutions on industrialisation.
Additionally, the DTIC, through mergers and acquisitions, persuades companies to make funds available to universities, with PepsiCo and the recent Mediclinic merger being an example of such cooperation.
3.6 Inter-ministerial approach to unemployment: While the DTIC is not primarily responsible for addressing the challenges of unemployment, it has been facilitating the upskilling and reskilling of workers, which is an important contributing factor to the success of industrialisation, transformation and economic inclusion.

In this regard, the Committee enquired whether any inter-ministerial interventions were being considered that would ensure the upskilling of the unemployed.
Also, whether the DTIC has a programme similar to the Expanded Public Works Programme (EPWP) of the Department of Public Works and Infrastructure.

The Minister informed the Committee that the Human Resource Development Council, chaired by the Deputy President, includes a number of Ministries, as well as the DTIC, seeks to coordinate efforts across the different spheres of government to promote skills development.
In addition, the Minister was of the view that there are sectors that could be the catalyst for job creation, such as the energy sector.

This sector provides an opportunity for skills development on the supply side of the labour market that would grow the economy to absorb more young people into employment.

With regard to a programme similar to the EPWP within the DTIC, the Minister informed the Committee that it has an equivalent programme in place at the IDC, the Social Employment Fund.
This programme aims to create part-time jobs, especially for graduates, to afford them an opportunity to utilise their formal training in a practical work setting.

3.7 Beneficiation: The Committee enquired what mechanisms the DTIC was considering to mainstream beneficiation beyond the current initiatives regarding batteries and platinum in terms of the manufacturing of catalytic converters.
The Minister informed the Committee that one of the biggest challenges in relation to beneficiation is the supply of energy.

He also indicated that many countries were exploring what measures they could implement that would ensure beneficiation particularly in the case of rare/critical materials.

In the case of South Africa, it would require greater collaboration with the Department of Mineral Resources and Energy as this falls within their mandate.
19 24 Furthermore, South Africa can learn from other countries that had experienced similar challenges, such as Chile that recently announced a new approach to the processing of lithium.

Also, countries on the African continent were exploring mechanisms to use their mineral resources to promote African development.

Another example has been Indonesia that developed a stainless-steel industry utilising its nickel resources.
Such an approach may elicit resistance from the mining industry, but to drive transformation government must scale up its development.

However, the Minister acknowledged that such action requires tough decisions as it may disturb the economic equilibrium and the commercial interests of a few.

3.8 Status of the African Growth and Opportunity Act (AGOA): The AGOA is a preferential trade programme that allows countries in sub-Saharan Africa to export products to the USA duty free.
This Act makes provision for the establishment of a US-Sub-Saharan Africa Trade and Economic Cooperation Forum (AGOA Forum).

South Africa has been scheduled to host the AGOA Forum, however, there had been recent calls by prominent figures in the US Congress to have the forum moved to another African country, in lieu of South Africa’s perceived support for Russia.
The Committee enquired what the Minister’s position was regarding this request, as it might be viewed by some as a threat to South Africa’s sovereignty.

The Minister informed the Committee that he had responded to the AGOA matter as part of an oral reply.

He noted in his response that about 18 to 20 percent of South African exports to the USA was either through one of two preferences: AGOA or the Generalised System of Preference.
He further acknowledged that it is in South Africa’s interest to retain access to these trade preference measures/programmes because of its contribution to job creation.

It should be noted that AGOA is not a trade agreement, but a trade measure adopted by the US Congress.

Therefore, it is the US Congress that determines which countries on the African Continent should have preferential access subject to a range of requirements, including their economic and political environments.
Once a country has shown sufficient economic progress it may no longer require access to AGOA.

With regard to the letter from the US Congress representatives, the Minister indicated that he would engage with the US Congress members and reiterate South Africa’s position around the Ukraine/Russia conflict.

He reiterated that 80 percent of South African trade with the US 20 25 was covered under the WTO rules, with just 20 percent covered under the preferential trade access unilaterally granted by the US.
3.9 BRICS Development Bank: The New Development Bank is a multilateral development bank founded by the BRICS nations of Brazil, Russia, India, China, and South Africa.

It aims to mobilise funding for infrastructure and sustainable development projects in emerging and developing economies.

The Committee enquired about the number of South African companies, including black-owned companies, currently receiving loans from the bank.
In addition, whether any of these companies were participating in any infrastructure projects on the African continent.

The Minister informed the Committee that the Development Bank’s major focus was on infrastructure development hence the majority of the loans would be related to infrastructure.

These loans were mostly provided to state-owned companies or utilities which fall under the National Treasury.
He endeavoured to seek the relevant information regarding the private sector but was of the view that most of the loans would be granted to public entities for infrastructure projects.

3.10 Movement of people: In 2018, the Protocol to the Treaty Establishing the African Economic Community Relating to the Free Movement of Persons, Right of Residence and Right of Establishment (AU Free Movement Protocol) had been adopted.
The Committee enquired about the role of the DTIC in the inter-ministerial forum regarding the free movement of people.

According to the Minister, the matter of the Protocol and the free movement of people falls under the championship of other ministries, including the Minister of Home Affairs.

The DTIC dealt with the movement of goods and capital with the Department of Home Affairs and National Treasury responsible for the wider issues around the Protocol on free movement of people.
At least 51 countries have signed with 47 countries having ratified the Agreement, however, there were a number of countries that were still hesitant about ratifying the Protocol, hence there was ongoing discussions.
21 26 CONCLUSIONS Based on its deliberations, the Committee drew the following conclusions: 4.1 The Committee welcomed the approach to mergers to ensure job retention as far as possible given the high level of unemployment in South Africa, as well as other socio- economic factors being considered.

4.2 The Committee remained concerned about the prevalence of fronting and its negative impact on economic transformation.
It encouraged the Department and the Broad-Based Black Economic Empowerment Commission to continue working with the relevant law enforcement authorities to strengthen the enforcement of the B-BBEE Act in this regard.

4.3 The Committee was concerned by the slow implementation of the National Credit Amendment Act of 2019.

It encouraged the DTIC in conjunction with the National Credit Regulator and the National Consumer Tribunal to finalise the implementation of the Act.
4.4 The Committee welcomed the DTIC’s initiatives to facilitate greater collaboration between the relevant educational institutions and industry to develop the necessary skills required by industry.

4.5 The Committee noted that the Industrial Development Corporation was administering the Social Employment Fund, which creates part-time jobs, especially for graduates, to gain on-the-job training.

It was of the view that such programmes were critical to enable graduates to obtain much needed work experience.
4.6 The Committee welcomed the beneficiation initiatives regarding batteries and platinum in terms of the manufacturing of catalytic converters, however, it was of the view that more could be done as beneficiation might be the catalyst to address unemployment.

22 27 4.7 The Committee supported the government’s position in terms of the United States’ African Growth and Opportunity Act and sought a speedy resolution of the negotiations to retain South Africa as a beneficiary.
4.8 The Committee welcomed the establishment on the New BRICS Development Bank and its focus on offering financial support for infrastructure projects.

4.9 The Committee supported South Africa’s accession to the Protocol to the Treaty Establishing the African Economic Community Relating to the Free Movement of Persons, Right of Residence and Right of Establishment, as it would facilitate greater and easier trade in terms of the African Continental Free Trade Agreement.
APPRECIATION The Committee would like to thank the Minister, Mr E Patel, and the Acting Director-General of the Department of Trade, Industry, and Competition, Ms M Mabitje-Thompson, as well as their team, for their cooperation and transparency during this process.
The Committee also wishes to thank its support staff, in particular the committee secretary, Mr A Hermans; the researcher, Ms Z Madalane; the content advisor, Ms M Sheldon; and the committee assistant, Ms Y Manakaza, for their professional support and conscientious commitment and dedication to their work.
The Chairperson wishes to thank all Members of the Committee for their active participation during the process of engagement and deliberations and their constructive concluding remarks reflected in this report.

REFERENCES Department of Trade, Industry, and Competition (2023) Fourth Quarter Report for the 2022/23 Financial Year.

Department of Trade, Industry, and Competition (2022) Annual Performance Plan 2022/23.

23 28 2.
23 28 2.

Report of the Portfolio Committee on Trade, Industry and Competition on its study visit to the Republic of Korea, dated 5 September 2023 The Portfolio Committee on Trade, Industry and Competition, having visited the Republic of Korea (hereafter referred to as South Korea) from 11 to 14 April 2023, reports as follows: 1.

Introduction Industrialisation has resurfaced as a critical driver of economic development and a tool for job creation.
This new age of industrialisation has led to a paradigm shift towards decentralised production, the development of new global production value-chains and business models, which requires modernisation of the manufacturing sector.

The Reimagined Industrial Strategy is the centrepiece of the South African government’s vision.

The Strategy is coordinated by the Presidency and puts emphasis on concrete actions to support sectors.
It presents a multipronged approach to industrial development, building partnerships with the private sector and organised labour to unleash job-creating investment.

The Special Economic Zone (SEZ) Programme forms an integral part of the Reimagined Industrial Strategy, which is purposefully structured to stimulate local and foreign direct investment (FDI).

The SEZ Programme also plays a critical role in supporting the implementation of South Africa’s Economic Reconstruction and Recovery Plan.
Furthermore, SEZs are intended to play an important role in the African Continental Free Trade Agreement, as South Africa positions itself to become a vibrant manufacturing hub on the African Continent.

The implementation process of the SEZ Programme requires collaborative efforts from all spheres of government to ensure that the roll-out of the Programme is efficient, integrated and well-coordinated.
It is only through cooperation at national, provincial and local government levels that South Africa can successfully build an inclusive economy.

Inter-governmental relations, both horizontally and vertically, are therefore important in achieving the set objectives of the Reimagined Industrial Strategy.

The efforts of pursuing a coordinated framework through the District Development Model approach has presented an opportunity for the creation of a balanced ecosystem for integrated development.
1 29 In further pursuit of this objective, government is currently reviewing the role of the private sector in the ownership, management and operation of industrial parks as this may improve the effectiveness of the industrial parks.

This is notwithstanding the key role of government to ensure that SEZs and industrial parks operate optimally and are adequately resourced.

One of South Africa’s key concerns is to grow its manufacturing base, which has been declining.
There has been a greater focus on industrialisation and localisation.

In this regard, government has been developing and implementing sectoral Master Plans through a process of social compacting with business, organised labour and experts in the relevant fields.

The Master Plans seek to improve industrial capacities and sophistication in these sectors, with a focus on becoming more export-oriented, facilitating skills development, greening the economy, and reclaiming domestic market space lost to imports.
Furthermore, South Africa is pursuing a policy of transformational and inclusive growth with a focus on decentralising the economy through the establishment of SEZs and the revitalisation of its Industrial Parks.
Given that the mandate of the Committee is trade, industry and competition, including the regulatory and standards architecture, which requires regular and informed oversight, it undertook a comparative study visit to South Korea in relation to policies that support and facilitate industrial and regional development, as well as investment promotion.

Industrial policy remains one of government’s key policy tools to address the issue of unemployment, inequality and poverty.
Therefore, it is important that the Committee actively engages government, and domestic and international stakeholders to see how it could be a conduit for the successful implementation of industrial policy.

As a result of this, there has been a number of policy discussions within the Committee regarding the ownership and potential privatisation of SEZs and Industrial Parks, given their implementation challenges.
Therefore, it became important for the Committee to investigate how other countries, that had gone through a similar economic development process, have dealt with such challenges.

1.1.

Purpose of the study visit The Committee had identified South Korea as a case study for its study visit.

The main purpose of the visit was to engage them on their industrial development policies, and their use and management of SEZs to support industrial development, particularly to grow a more decentralised economy.
The focus was on engaging key government departments and industry stakeholders in this regard, and to visit a few SEZs in South Korea.

2 30 South Korea has had a similar approach to developing its manufacturing base as South Africa by moving from import substitution to export promotion.
The following factors were considered pertinent given South Africa’s policy objectives: • Although South Korea is not a naturally resource rich country, it focuses on exporting value-added goods, which is a policy objective of the Department of Trade, Industry and Competition (DTIC).

• South Korea provides a wide range of support to exporters in this regard.

• • It makes use of regional global value chains to increase competitiveness.
It has a broad number of types of SEZs, with a redefinition of their SEZs to become more inclusive and supportive of domestic industries as well as encouraging greater innovation in new industries.

• Legislation such as the Foreign Investment Promotion Act that helps the government with its targets of investment attraction and job creation.
The Committee’s main objectives for the study visit were to understand the following: • South Korea’s industrial development and localisation policies and how this has been used to facilitate job creation, and to support and promote investment into the manufacturing sector, in particular, the use of policies to facilitate deeper industrialisation across and within sectors.

• Mechanisms to assist investors, such as One-Stop Shops; and to integrate the rural economy into the mainstream economy.
• The development of the green economy, given its growing importance in light of climate change and its impact on economies globally including South Africa.

• Its legislative and regulatory stance and the roles of the state versus private sector with respect to ownership.

1.2.
South Korean stakeholders visited During its study visit to South Korea, the Committee engaged the following stakeholders: • Global Knowledge Exchange and Development Center (GKEDC) of the South Korea Development Institute (KDI) • Ministry of Trade, Industry and Energy (MOTIE) • South Korea Trade Promotion Agency (KOTRA) • Incheon Free Economic Zone (IFEZ) 3 31 • DHL South Korea Ltd • HD Hyundai Heavy Industries (HHI) • Busan Techno Park • Busan-Jinhae Free Economic Zone (BJFEZ) • Busan Port Authority (BPA) 1.3.
Delegation The following Members and staff undertook the study visit: • Ms J Hemans (African National Congress (ANC)) (Chairperson and Leader of the delegation) • Mr S Mbuyane (ANC) • Ms R Moatshe (ANC) • Mr C Malematja (ANC) • Mr M Cuthbert (Democratic Alliance (DA)) • Mr D Macpherson (DA) • Ms K Hlonyana (Economic Freedom Fighters) • Mr F Mulder (Freedom Front Plus) • Mr W Thring (African Christian Democratic Party) • Mr A Hermans (Committee Secretary) • Ms Z Madalane (Researcher) 1.4.
Outline of the report Firstly, the report provides an overview of the South Korean economy, as it relates to FEZs.

Secondly, it describes the implementation of the impact of industrial policy, its implementing vehicles and agencies, the impacts thereof on the South Korean economy, labour market and environment.

Thirdly, it provides the Committee’s key observations from the study visit.
Fourthly, it lists acknowledgements and sets out the Committee’s recommendations to the Minister of Trade, Industry and Competition for consideration by the National Assembly.

2.

An overview of South Korea’s economic development and the key factors behind its rapid industrialisation 4 32 During its study visit, the Committee engaged the GKEDC, which forms part of the KDI.
The GKEDC provides a platform to encourage learning, and exchange knowledge regarding South Korea’s 70-year socio-economic development experiences following the South Korean War.

The KDI was established in March 1971 by the South Korean government to provide in-depth and practical analysis for the development of appropriate economic policies in South Korea.

As the first domestic social science think tank, KDI was tasked with designing the nation’s economy towards prosperity.
Starting with a team of 12 economists, the KDI quickly became a driving force behind the economic and social development of the nation.

Over the past five decades, the Institute has expanded its research to encompass a broad range of fields including macroeconomics, finance, social security, labour, industry, trade, competition policy, and the North-South Korean economy.

Its work has made significant contributions to the formulation of sound policies and the implementation of institutional reforms.

2.1.
2.1.

Overview Dr J Kim1 presented on the economic development of South Korea since the 1960s.

He informed the Committee that South Korea had received over US$13 billion in aid between 1945 and 1995, which contributed towards its recovery after the wars, and facilitated the transformation from a rural, agriculturally based economy to a modern, industrial nation while maintaining an average growth rate of 9%.
The export-focused, market-friendly industrial policies, the development of human capital, respect for science and technology, and strong governance were the main drivers of South Korea’s economic success in the 1960s.

South Korea was an agrarian society, with farmers making up about 70% of the population.
In contrast to South Africa, South Korea lacks natural resources; as a result, it was forced to import raw materials, parts, and machines that could not be produced locally and use it to build factories.

Squid and other fish were among South Korea’s most important items for export in the 1960s since it lacked a manufacturing sector.

He emphasised that due to its lack of mineral resources, South Korea was unable to rely on mineral resource-based exports.
Therefore, South Korea adopted an industrialisation strategy that relied on exports and targeted goods from light industries.

This export-oriented/outward looking industrial strategy consisted of importing raw materials and semi-finished goods, adding value through a skilled labour force, and exporting the finished goods at a favourable exchange rate.
1 Dr Joon-Kyung Kim, Honorary Professor of the KDI School and 14th President of the KDI 5 33 According to Dr Kim, despite South Korea having been one of the world’s poorest nations at the time, it had human capital of the highest standard, enabling its citizens to produce finished goods that could be sold on the global market, specifically in the United States of America (USA).
This reality encouraged the growth of labour-intensive industries like textile, apparel, and footwear production, where South Korea enjoyed a comparative advantage partially due to its low wages.

As a result of low wages, South Korea began to produce finished manufactured goods like electronics and textiles in the 1960s, which ensured foreign dollar influx.
This was an example of South Korea’s export promotion strategy, and as a result of its export-oriented industrial policy, the country’s export share of gross domestic product (GDP) had increased dramatically.

This resulted in South Korea gaining foreign currency, which it utilised to buy more capital goods, raw resources, and component parts.
Therefore, the opening of South Korea’s economy had been defined by these market-friendly policies that promoted economic development through the manufacture of labour-intensive goods in industries where it could gain a competitive edge.

In order to compete globally, the government supported the development of new technologies and improved effectiveness through incentives.
After the economy opened up, it transitioned into heavy industries, with semi-conductor, automotive, and petrochemical items making up the bulk of its export basket.

This resulted in South Korea subsequently joining the developed economies, as evidenced by its rising export percentage of GDP.
Table 1: South Korea’s seven major export items (share of total exports, %) 1961 Iron ore 1 1970 13,0 Textile, clothes 1980 40,8 Textile, clothes 2 Tungsten 12,6 Plywood 3 Raw silk 6,7 Wig 4 Anthracite 5,8 Iron ore 5,9 11,0 Electronics 11,4 Textile, clothes Steel product 10,8 Steel 9,0 product Footwear 5,2 Chemical product 5 Squid 5,5 Electronics 3,5 Ships 3,5 Automobile 5,5 1993 28,8 Electronics 2021 29,5 Semi- 19,8 conductor 19,3 Automobile 10,7 8,0 Petro- chemical 5,6 General machinery Petroleum product Steel product Ships 8,5 8,2 5,9 5,6 3,6 6 Other fish 4,5 Confectionary 2,3 7 Graphite 4,2 Footwear Source: Kim (2023) Synthetic resin 2,1 Metal product 3,3 Ships 2,3 General machinery 4,5 3,7 The South Korean government continued its pursuit of capital- and technology-intensive heavy industrialisation plans throughout the 1970s.
This had only been possible due to General Park 6 34 Chung-Hee’s military leadership, which supported the defence, heavy, skilled, motor, ship, and auto industries through the National Security Council, demonstrating that South Korea had taken control of its own development.

2.2.

Economic development from the 1960s onwards Due to low domestic savings, and to implement its outward-looking industrial strategy, South Korea required significant foreign currency to make capital investment.
Although exports increased, foreign currency receipt was still low and South Korea had not yet been in a position to build up foreign reserves.

Also, during this period, the US aid had declined significantly, and aid received had been through concessionary loans geared toward military assistance.

This deadlock had been broken by South Korea’s restoration of diplomatic ties with Japan, with the primary objective having been to obtain restitution, despite the vehement hostility of its populations.
The resumption of these diplomatic ties had been supported by the US because it would lessen the burden on US aid provision to South Korea.

When relations between the two countries had been normalised in 1965, Japan agreed to pay reparations of US$800 million in funding for economic cooperation, with US$300 million in grants, US$200 million in concessionary loans, and US$200 million in commercial loans.
The South Koreans had been of the view that this was its retribution for the 36 years of colonial occupation by the Japanese.

A substantial sum of money had been allocated to enhance the industrialisation effort in South Korea.

This paved the way for Japanese capital, components, and technology to enter the country.

The “Law of Operation and Management of Japanese Reparations” was enacted to prevent the misappropriation of funds for political objectives.
One of the key provisions was that the most serious offense with regard to the misappropriation of funds would carry a death sentence.

This law effectively discouraged politicians and other public servants from engaging in corrupt behaviour.

In 1965, the South Korean government had set out to build a steel mill as the centrepiece of its heavy and chemical industrialisation strategy as part of its first Five Year Economic Development Plan.
However, they had been unable to obtain the funding on the global financial market to begin the project.

Given the low demand for steel at the time, there had also been significant concerns about the financial viability of such a choice.
Table 2: Allocation of Japanese Reparations Fund 7 35 Project Amount (US$’000) Ratio (%) Agriculture (irrigation and agricultural production expansion program) Fishery (fisheries promotion and fishing boat construction) Manufacturing Purchase of raw materials (textiles, fertilizers, chemicals, etc) Construction of POSCO Promotion of SMEs Science and Technology Equipment for practical training for the vocational schools Equipment/facilities at KIST Social Infrastructure Construction of Soyang-River Multi-purpose Dam Gyeongbu (Seoul-Busan) Expressway Improvement of Railway system Construction of Yongdong Thermal Powerhouse Expansion of Waterworks (Kwangju City, Taejeon City, Cheongju City) Construction of Namhae Bridge Rehabilitation of Han-river Bridge Power Distribution facilities Expansion of out-of-town Telephone lines Total (Reparation funds in the form of grant and public loans) 500 100.0 Source: Kim (2023) Despite these impediments, the South Korean government had persisted in its efforts to construct a steel mill.
Japan in recognising the mutually beneficial security and economic ties with South Korea, since the opening of relations and payment of reparations, had supported the decision of the South Korean government to build an integrated steel mill by investing a portion of the reparations budget for that purpose.

The Pohang Iron and Steel Company (POSCO) would later emerge from this.

A total of 27% of the reparations budget had gone towards purchasing raw materials, with 24% going towards building POSCO.
The reparations fund had also been used to purchase furnishings and facilities for the South Korean Institute of Science and Technology, as well as for equipment for vocational schools.

More than 50% of the reparation funds had been used on promoting the manufacturing industries, which saw the transition from an agrarian economy to an industrial economy.

The initial plant’s funding came from Japan, and with the help of Mitsubishi and other Japanese 8 36 businesses, cutting-edge facilities had been built.
The industrialisation push had been critically dependent on Japan’s reparations, and it would not have gotten off the ground as quickly without the normalisation of relations between the two nations.

Since South Korea was a former colony of Japan, many South Koreans stayed in Japan and had achieved great success.

Consequently, the inward direct investment by South Korean ethnic groups in Japan had been another factor helping South Korea’s industrialisation.
Around this time, Japan had started to lag behind other nations in labour-intensive industries like textile and electronics.

As a result of the normalisation of relations, South Korean ethnic businesses in Japan had begun to look at South Korea as a potential location for the relocation of their manufacturing plants and pre-owned machinery in these sectors.
At the time, South Korean wages had been 20% lower than those in Japan, so South Korean ethnics started to directly invest in the relocation of their production facilities.

The majority of the investment had been used to import pre-owned facilities producing clothing, nylon, wigs, electrical products, and other consumer goods.

Between 1963 and 1964, South Korean ethnics had invested a total of US$35 million dollars of Japanese capital in the South Korean manufacturing sector to secure its cheaper labour.
Mr L Won-man, a member of the South Korean ethnic group, had proposed that South Korea should compete with Japan in the low-tech industries indicated above.

It would help South Korean products to be more competitive in the global market, if their wages were 20% lower than their Japanese counterparts.
He had also advocated in favour of building an industrial complex outside of Seoul that may draw South Korean ethnic entrepreneurs with their managerial, financial, and entrepreneurial talents, as well as networks of global markets.

He had favoured the concept of “process trade” that would enable South Korean businesses to benefit from Japan’s manufacturing and marketing prowess by importing raw materials, processing them locally, adding value, and exporting the final goods to the USA.
The South Korean government had reportedly embraced the plan and had moved forward with encouraging the development of low-tech enterprises and industrial complexes, according to Dr Kim.

The country’s economic transition had been largely a result of the considerable economic expansion and industrialization that followed.

2.3.

Guro Export Industrial Park 9 37 The Guro Export Industrial Park was the first industrial complex established in South Korea to promote export-oriented manufacturing businesses.
In 1967, 18 companies owned by Japanese ethnics, two foreign companies, and 11 domestic companies had moved into the Park.

In order to promote these export-oriented light industries, the government provided the necessary support with respect to the exchange rate, tax incentives, and export subsidies, among others.

The government then focused on the expansion of the Export Park, with textiles initially being the largest export item.
However, from 1985, electrical and electronic goods became the largest export item.

The “Triangular Trade Structure” emerged as a result of the normalisation of relations with Japan and the deployment of South Korean troops to the Vietnam War to support US forces.

Japan became the primary supplier, and the US served as the primary consumer of South Korean products in exchange for South Korea’s support in the Vietnam War, with the US opening its textile market to South Korea.

2.4.
2.4.

Securing skilled workers and engineers The South Korean government recognised that a dynamic skilled workforce would be essential to move towards an industrial strategy centred around exports, which could promote the government’s objectives of structural and economic transformation.

As mentioned earlier, in the 1960s, South Korea’s economy relied on unskilled and semi-skilled labour, concentrated in the textile, footwear, and apparel manufacturing sectors.
However, this export-oriented industrial strategy required a highly skilled workforce for the industrial complex to operate optimally and to grow heavy chemical industries in the future.

Hence, resources were redirected to ensure a highly skilled workforce was developed, and that the supply of skilled employees being developed through the educational system was connected to the needs of the economy.
South Korea had typical labour-surplus economic conditions in the early 1960s, with a modest domestic market.

In order to provide the workforce required to deliver on the government’s comprehensive economic growth plan, the vocational education and training system had to be reorganised.

Due to systematic planning and standardisation, the majority of formal technical and vocational education was delivered through the state’s educational system.
The government had to boost enrolment in vocational schools in the 1960s to produce technicians for labour-intensive light industries.

10 38 Furthermore, the government had undertaken a major structural shift in the 1970s to promote the growth of heavy chemical businesses.

The demand for skilled workers and technicians had been further exacerbated by the rapid structural transformation.

In response, the government had to expand secondary technical and vocational education.
This resulted in reorganising the existing five-year junior technical colleges (comprising three years of secondary and two years of post-secondary programs) into two-year junior vocational colleges designed to foster technicians and engineers capable of performing specific technical tasks in the heavy and chemical industrial fields in tandem with the rapid structural shift to those industries.

2.4.1.
2.4.1.

Societal prejudice Because South Korea had a well-established social hierarchy, people with technical and vocational skills had been historically scorned in society.

Government officials were at the top of the hierarchy, followed by farmers, merchants, and technicians.

Therefore, the youths at the time showed no interest in becoming technicians.

Also, the younger population received no incentives to enrol in technical schools and become technicians.
Training precision technicians had been a prerequisite for the policy of developing and promoting the heavy and chemical industries (defence industries).

The defence industries demand exceptionally, highly skilled precision technicians who are able to cut iron to sizes smaller than 1/100 mm precision.

Precision technicians were critical as poor product quality would have led to bankruptcy.
Therefore, South Korea had to make certain advances in the technical and vocational educational system with an emphasis on hands-on training.

The objective had been to provide 2 400 hours of free technical instruction at the vocational schools, shifting from theory to practical training.

To do this, the government had established technical high schools, one in each province, to balance regional development.
They had also dispersed the incentives throughout the schools, providing young people incentives such as scholarships and, most importantly, exempting them from military service.

This had been crucial because, in South Korea, every male was required to complete three years of military service.

In spite of being exempt from military service, it was still challenging given the social hierarchy, as 8 000 South Korean young men travelled to West Germany to work as coal miners until the late 1970s.
Since actual skills development had been the primary objective of mechanical technical schools, their curricula had been more narrowly focused.

General education and special 11 39 technique training had been included in the curriculum, with a general education to special technique training ratio of 40:60.
The ratio of theory to practical training in the special technique curriculum was 30:70, and the minimum number of hours of practical training required over three years was 2 400 hours, or three hours per day for each student.

2.4.2.

Kum-Oh Mechanical Technical School In terms of facilities and instructors, the Kum-Oh Mechanical Technical School certainly was one of the most prestigious technical institutions in Asia.

It served as a model for other industrial technical colleges.
The Japanese reparation fund had been utilised to compensate for the recruitment of Japanese instructors, the training of the school’s instructors in Japan, and the acquisition of technical training equipment.

Although there had still been a strong anti-Japan sentiment in South Korea at the time, the government nevertheless sought to offer the best training available by employing Japanese teachers over a three-year contract.
Eight Japanese teachers, some of them being retired educators, worked at the Kum-Oh School for three years, until the first classes graduated.

Casting, welding, machining, heat treatment, and forging were their areas of specialisation.

The school’s admission standards were quite high, with an emphasis on intellectual capacity, moral character, and physical strength.

First and foremost, the potential students’ middle school grade point average (GPA) should have been in the top class (Intelligence).
The prospective pupils’ social skills and moral character should be reflected in the middle school principal’s recommendation letter.

The candidates were selected by the education committees in each city and province.

After a series of aptitude tests, physical examinations, and interviews, the students were finally admitted.

Successful students received complete scholarships that covered all costs, including books, clothing, and housing.
Industrial vocational schools used to lack the proper ethical standards, which discouraged excellent performers from studying there.

Students pursuing mechanical technology would then be graduating with the knowledge and abilities required to pursue careers as precision technicians after overcoming the odds and being admitted.

Of the 400 new students in the class of 1976, 121 had been their respective schools’ valedictorians, 256 had been in the top 5%, and only 23 had been in the top 10%.
They had been sons of rural farmers, with the majority of these pupils coming from disadvantaged backgrounds.

Vocational school students had excelled in the International Vocational Training Competitions (the Vocational Olympics), winning nine times in a row from 1977 to 1991.

They had also started obtaining their technical licences.
12 40 The President at the time had praised the students, who were honoured with a ticker-car parade, treated as social champions, and declared to be the architects of the modernisation of South Korean businesses.

The South Korean university system had been severely underdeveloped in the 1960s, with the curricula at engineering institutions not applicable to the needs of the industry.
At the time, the South Korean government had begun to promote heavy industries; as a result, the government began to put more emphasis on practical training, matching one area of study with one local technical university within driving distance of a nearby industrial complex.

It had also increased the entrance quota on heavy and chemical industry (HCI) related majors.

This entailed coordinating academic requirements with business needs of the nearby industrial complex.
For example, considering its proximity to the Changwon Machinery complex, Busan University’s engineering college concentrated on machinery.

Similar to how Kyungpuk University’s engineering college specialised in electronics to support Kumi Electronics Industrial Complex, Cheonnam University’s engineering college focused on chemistry to serve the Yeocheon Petrochemical Complex.
By improving employability and enhancing the competitiveness of local firms, the university-industry collaboration had assisted students in matching their education and abilities to the requirements of the local industries, thus supporting local job creation.

The partnership between the university and the industry had been quite successful, especially in the instance of Kyungpuk University.
Graduates from the engineering programme at Kyungpuk University, which focused on electronics and electricity, had been employed by Samsung Electronics in the Kumi Industrial Complex and advanced to executive positions.

The current chief executive officer (CEO) of Samsung is a Kyungpuk graduate.

3.

Development of Free Economic Zones in South Korea The Committee engaged the MOTIE and the GKEDC on the development and regulatory framework of FEZs in South Korea.
The MOTIE is responsible to provide a foundation for economic growth through the areas of commerce, trade, investment, industry, and energy, particularly the development of FEZs.

13 41 3.1.

Evolution of the Special Economic Zone Systems Dr J Hong2 asserted that during the 1997 International Monetary Fund (IMF) Foreign Exchange Crisis, South Korean society had been severely impacted.

Numerous businesses had failed, and many South Koreans had lost their employment.
At that time, South Korea had limited foreign currency and was looking to attract foreign investment.

This resulted in the development of SEZs in South Korea in response to that crisis.

SEZs in South Korea were heavily promoted to draw FDI and address shortfalls in foreign capital.

The establishment of the Foreign Investment Zone, the creation of the customs-free zone, and the creation of the FEZs in 2003 represented phases in the evolution of the South Korean system for attracting FDI.
Launched in 1970 as the nation’s first SEZs, the FEZs evolved into the Free Trade Zone in 2000 and then the Customs Free Zone in 2004.

It now continues as a Free Trade Zone.

To encourage foreign investment, the Foreign Investment Zone system had been implemented in 1997.

In order to attract foreign investment, boost national competitiveness, and balance regional development, the South Korean government developed the FEZ starting in 2003.
Two more FEZs had been established after the first one had been established in 2003, in Incheon.

There were currently nine FEZs in South Korea, with two of them having been established in 2008, two in 2013, and two more in 2020.

The Incheon FEZ, which is close to the Seoul Metropolitan Area, is the most prosperous.

The second is in Busan, the second-largest city in South Korea, which is close to a significant port and an international airport.
The South Korean government intends to build a brand-new international airport in Busan.

However, there are a number of smaller FEZs, with the economic performance of the FEZ in the East Coast being low.

Businesses were averse to locating in FEZs where economic performance was not significant.

Many countries are currently pursuing the development of SEZs, but it is important to select locations that are preferred by investors.

3.2.
3.2.

Legal framework for the establishment of a FEZ The MOTIE is the custodian of the Special Act on Designation and Management of FEZ of 2002, which serves as the formal legal foundation for the creation of the FEZs.

The objective was to establish a SEZ that contributed to the facilitation of Free International Trade/Business.
Benefits associated with establishing a business within an FEZ, would be de-regulation, 2 Dr Jin-Ki Hong, Honorary Research Fellow of the Korean Institute for Industrial Economics and Trade 14 42 numerous incentives, and high-tech corporate infrastructure.

For foreign investors, the FEZ would be a top-tier location for doing business and relocating.
In 2003, South Korea introduced the FEZs by adopting a number of deregulation initiatives, specially designated zones designed to enhance the working and living conditions for foreign- invested businesses in South Korea.

In 2003, the FEZ system was developed to promote South Korea as an economic vehicle for Northeast Asia, with the combination of industry, commerce, housing, and education.

The objective was to balance regional growth while making it the commercial and economic hub of Northeast Asia.
Geographically speaking, South Korea is situated in the heart of Northern Asia, one of the world’s three most prosperous regions.

The region comprises 147 cities with a population of more than 1 million people, and it is located between China, the second-largest economy in the world, and Japan, the third largest.

The original goal was to establish a hub for Northeast Asia with the ideal business and living environments.
In addition, it serves as a transportation hub and offers geographic benefits for accessing the 1,6 billion-person Northeast Asian market.

According to the South Korean government, the FEZs were intended to become business, logistics, and high-tech sector centres.

These are interchangeable, and the South Korean FEZs’ current responsibilities include guaranteeing global competitiveness, as such, the pursuit of the development of global and high-tech industry hubs.
There were currently discussions of reducing regulations in the FEZs.

3.3.

Rules and legislative framework for FEZs In terms of the legislation, a FEZ Committee is established within the MOTIE to support FEZs and perform the affairs regarding the FEZs.

This Committee is chaired by the Minister of Trade, Industry and Energy, with support of a vice-chairperson, ex officio members, and commissioned members.
This Committee deliberates on and passes resolution on matters concerning: • • the main policy and system with regard to FEZs; formulation of master plans for FEZs; • designation, revocation of designation, and the alteration of designation, of a FEZ; • development plans for FEZs under Article 6; • the provision of administrative services necessary for foreign-invested enterprises to conduct their business in FEZs; 15 43 • the coordination of opinions with the heads of central administrative agencies and Mayors/Do Governors in connection with FEZs; • exclusion from application of special cases concerning the handling of administrative affairs of local governments, etc.
under Article 27(2); and • other matters prescribed by Presidential Decree and necessary for the designation and management of FEZs.

The FEZ also includes a planning office with personnel from the Ministries and Local FEZ Authorities on secondment.

All of these officials work for the government, supporting the FEZ Committee and coordinating the activities of the nine FEZs.

Each of the nine FEZs are administered by an FEZ authority, which stands in for the district’s municipal government.
As the FEZ is being developed, these authorities provide businesses a one-stop shop offering a variety of services.

3.4.

One-stop Administrative Service MOTIE (Central Government) and the FEZs Authorities (Local Government) provide a One- stop Administrative Service to investors wishing to invest in South Korea’s FEZs.

The One- stop Administrative Service offers business consulting, information and advisory services, and administrative services.
The types of services offered are outlined in the table below.
Table 3: Types of services offered by the One-stop Administrative Service Business Consulting •Discover new investment opportunities •Seek for promising investment partners •Evaluate investment sites Provide information and advisory service •Advise on incentives and their usage •Consulting on law, accounting, and tax • Offer investment information for FEZs Administrative Service •Deal with civil complaints regarding foreign investment •Coordinate with government authorities or agencies •Immediately respond to complaints or grievances Source: Ministry of Trade, Industry and Energy (2023) 16 44 3.5.
FEZ incentives Based on the Special Act on Designation and Management of FEZs, the Foreign Investment Promotion Act, and municipal ordinances, the Korean FEZs provide a variety of financial and site support for cash incentives, infrastructure, and rent.

The FEZ provides exemptions and reductions in national taxes, such as tariffs, as well as municipal taxes, such as acquisition and property tax, for foreign companies and developers.
Companies also obtain a five-year 100% tax exemption on imported capital goods with regard to the associated import tariffs.

Companies are exempt from 100% of the acquisition tax for up to 15 years in accordance with municipal legislation, as well as from the property tax for the same period.

Furthermore, by easing regulations, FEZs support international businesses and developers.
Companies are not required to fill open positions with locals, the elderly, or those with disabilities when it comes to labour.

Companies may increase the terms and conditions of employment, and unpaid leave is permissible.

Additionally, firms are excluded from Seoul regulations in the metropolitan areas, and businesses in urban areas are allowed to clear transactions up to US$100 000 directly through foreign currency transfers.
Additionally, the South Korean government provides cash incentives to companies based in the FEZs by assisting with the costs of purchasing land and buildings, paying rent, funding construction, and funding employment awards.

It also supports the construction and improvement of infrastructure, such as roads, trains, airports, water and sewage systems, and waste treatment facilities.
It provides financial assistance for start-up expenses related to building and operation setup, as well as a 50-year authorisation for foreign companies to lease public and national lands.

It also provides financial assistance for the establishment, operation and construction of the education and research facilities.
Table 4: Incentives offered within FEZs Category Tax reductions or exemptions Location Support Cash Grant Infrastructure Details Local tax reductions or exemptions (100% and for up to 15 years) Reductions or exemptions of tariffs for 5 years for capital goods imported Rental fee reductions for state-or publicly owned, long-term lease (50 years) Factories and research facilities, Employment and learning/training Roads, parks, waste disposal facilities, etc.
17 45 Category Learning and research institute support Eased regulations on labour Relaxed regulation on foreign exchange Details Initial operation cost, construction, establishment, and preparation, etc.
Exempt from the mandatory requirement of employing the disabled Loosened regulation on temporary workers Unpaid holidays for employees No reporting if the transactions are US$100 000 or lower Source: Ministry of Trade, Industry and Energy (2023) 3.6. Business and living environment South Korea is one of the most desirable business destinations globally.

According to the World Bank’s “Doing Business 2019” report, South Korea was ranked fifth as a business-friendly nation.
It is the third-largest market in the world and has signed Free Trade Agreements (FTAs) with 59 countries.

South Korea has concluded FTAs with the USA, the European Union and China, and as a result of the FTA with China, global investors are able to access the Chinese market first.

Therefore, South Korea can export products to every country in the world.

An important selling feature for the South Koreans in the FEZs is the high quality infrastructure.
The Incheon International Airport, which is adjacent to the Incheon FEZ, offers direct flights to 173 places in 52 countries and averages 71 million passengers a year.

Connectivity to all regions across the country is made possible with access to ports, highways, and railways.

This ensures a reliable distribution system using the nation’s rail, maritime, and highway networks.
Basic infrastructure, such as electricity, water, and gas, is offered in the FEZs, including excellent information and communication technology (ICT) networks.

Electricity, and access to water for industrial use are provided at a discounted rate.

The FEZ offers an ideal living environment with high levels of security and safety for both families and businesses.

Additionally, it allowed prestigious universities, high schools, and elementary schools to set up operations within the FEZ.
It also provides advanced medical facilities, with every residential area having its own medium-sized hospital and pharmacy.

18 46 Every FEZ offers a methodical and expert One-Stop solution to any business looking to locate.

Each FEZ appoints a project manager to support the investor throughout the investment process, from the first evaluation of the investment to managing the process and dealing with follow-ups.
Furthermore, it offers administrative support for legal, accounting, and tax management, and assists potential investors by guiding them in making sound business decisions.

Through different institutions and regulatory reform, the FEZs have made impressive strides toward enhancing the commercial activity of foreign-invested companies and living standards within the FEZ.

As of 2021, cumulative FDI performance was US$20,5 billion, with a growth rate that increased from 29% in 2009 to 90% in 2021.
In addition, tenant businesses and employment sales have recently increased by 10% annually.

3.7.

Designated Free Economic Zones Since 2003, FEZs have been established in Incheon, Busan/Jinhae, and Gwangyangi.

Nine areas, totalling 275 km2, have been designated as FEZs and are already operational.

These are outlined in table 5 below.
Table 5: Free Economic Zones in South Korea Name Key Strategic Industries Transportation Infrastructure Employment Number of Companies Gwangju Future vehicles Gwangju Airport 1 048 24 Smart energy Artificial Intelligence (AI) convergence Ulsan Future Mobility Ulsan Airport, 2 096 74 Future chemical materials Ulsan Port Hydrogen/low-carbon energy 19 47 Name Key Strategic Industries Transportation Infrastructure Employment Number of Companies Incheon Bio/healthcare Incheon 96 641 3 481 Smart manufacturing International Aviation/complex logistics Airport, Incheon 28 727 (FCIC3) Busan - Jinhae Knowledge/ tourism services Port 206 (FCIC) Complex logistics/ Kimhae Airport, 56 666 1 893 transportation Busan New Port Smart transportation equipment 12 278 (FCIC) 168 (FCIC) Advanced materials/parts/ equipment Bio/healthcare Gwangyang Functional chemicals Gwangyang Port 17 592 645 Bay Area Green energy Metal materials/parts Logistics/transportation Daegu - ICT/robot Gyeongbuk Medical/bio 1 848 (FCIC) 38 (FCIC) Daegu Airport 29 888 905 Future mobility 1 634 (FCIC) 28 (FCIC) Chungbuk Bio/health Cheongju Airport 3 756 83 Smart IT parts Air mobility Energy materials/parts 459 (FCIC) 9 (FCIC) Gyeonggi Future mobility Pyeongtaek Port 393 16 Medical/Bio Hydrogen energy Logistics/conventions 22 (FCIC) 3 (FCIC) East Coast Recreational tourism/leisure East Sea Port 55 3 Hydrogen energy Advanced materials/parts 0 (FCIC) 0 (FCIC) Source: Ministry of Trade, Industry and Energy (2022 & 2023) 3.8.
Policy direction of the FEZ The MOTIE announced its vision and strategy for FEZs on 22 October 2020, in response to changes in the industrial environment, such as the emergence of new industries and 3 Foreign Capital Invested Companies 20 48 reorganisation of global value chains.

Its objective is to become the global centre of new industries leading innovative growth, targeting new investment of US$50 billion, both internationally and domestically.
Furthermore, it seeks to encourage new companies to join FEZs, thereby creating 200 000 additional jobs.

The FEZ Act was revised in May 2021, which provides the institutional foundation for each FEZ to select key strategic industries.

These should centre on new high technology and regional specialised industries and establish performance-oriented development plans based on this.
By introducing a new vision, it seeks to create an innovative ecosystem with the proper programmes to strengthen the capacity of tenant companies in each district and foster cooperation on projects among companies, universities and research institutes.

With this programme, the South Korean government plans to support the growth of individual tenant companies while creating an environment in which voluntary changes and cooperation between innovative entities could take place.
This is to ensure that FEZs become the centres for industrial innovation.

With new innovation within the financial industry prompted by the advances in ICT, challenges emerged within commercialisation as a result of regulations.

Therefore, the South Korean government enacted the Special Act on Support for Financial Innovation in response to changes within the financial industry to address these regulatory challenges by introducing a programme called the “financial regulatory sandbox”.
This programme’s primary objective is aimed at creating safe and accurate financial regulations while taking into account public priorities like promoting new industries and safeguarding consumers.

This would further enhance regulatory reform capacity that would facilitate investment in new industries.
Furthermore, it would strengthen collaboration between the FEZ authorities and the South Korean Institute for the Advancement of Technology, developing supporting systems to identify sandbox initiatives, thus, assisting the deregulatory applications for tenant firms.

3.9.
3.9.

Lessons from the South Korean experience Dr Hong highlighted the following key lessons learnt from the South Korean experience: 3.9.1 Pursuit of economic logic rather than political purposes: Politically driven FEZs do poorly economically.

Instead, they should be carefully planned using rational economics.

One should guard against politicians that want the central government to 21 49 designate FEZs in their regions, as FEZs should be where resources would be concentrated.
Currently, there are too many FEZs in South Korea, some of them exist purely based on political reasons.

3.9.2 Efforts to strengthen the competitiveness of the national economy: Notwithstanding the rationale of FEZs being enclaves, the competitiveness of the economy and the investment environment are absolutely linked to their success.

Therefore, it is critical to have a vibrant and strong economy, otherwise the FEZs would lose their competitiveness.
3.9.3 Strengthen links with the domestic economy: FEZs should be a vehicle that facilitates the structural transformation of the economy.

To ensure this transformation, the following aspects are critical elements of this transition (i) encouraging investment from domestic firms into the FEZs, (ii) strengthening backward linkages with supply chains as well as the value-addition (forward linkages), and (ii) encouraging the movement of labour and entrepreneurs between FEZs and the domestic economy.
3.9.4 FEZs test beds for a better society: A prosperous FEZ would lower the dependence on incentives, such as tax breaks and cheap labour, in the long-run.

This would facilitate a more effective environment to develop firm level competitiveness and sustainability.

4.
4.

South Korea Trade-Investment Promotion Agency (KOTRA) The KOTRA was established under the South Korea Trade-Investment Promotion Agency Act in 1962 to contribute to the development of the national economy by undertaking trade promotion, investment facilitation between domestic and foreign companies, and supporting industrial technology cooperation.

It is also tasked with assisting foreign companies to identify quality products and companies in South Korea.
In 1995, KOTRA was renamed the South Korea Trade-Investment Promotion Agency, with the added function of attracting FDI.

The main industry focus areas for KOTRA, among others, are the automobile and construction equipment industries.

22 50 Major roles undertaken by KOTRA include: • Expanding medium- and small-sized enterprises’ (SME) business in overseas markets.

• Supporting small-sized enterprises to extend their business abroad.

• Overseas market information production, spread and consulting.
• Attracting FDI into South Korea.

• SME Global Business Training and attracting foreign professionals.

• Improving national branding, supporting international development cooperation and supporting munitions trade.

• Undertaking projects requested by the Government.

By creating trade delegations in collaboration with local government and institutions, KOTRA provides foreign nationals the opportunity to interact with South Korean businesses, including SMEs.
It supports and develops customised marketing services and opportunities for South Korean SMEs for the global market.

Furthermore, it utilises its global network, by arranging one-on-one business meetings between South Korean companies and foreign buyers.

One of the main objectives of KOTRA is to assist domestic companies to find global partners with the purpose of helping South Korean companies to enter global value-chains.
The Global Partnering Programme facilitates grant funding in research and development (R&D) in order to form cooperative business partnerships involving technological cooperation, product sourcing and equity investment.

Through organising exhibitions and pavilions, KOTRA provides the platform for domestic companies to engage with foreign buyers to buy SOUTH KOREA.
Through the South Korean Auto parts Plaza (KAP), which is a combination of seminars and business consultations for overseas projects such as civil engineering, construction, transportation, infrastructure, energy and power-plants, KOTRA creates the vehicle for SMEs to participate in the global procurement market and establish business partnership between South Korean SMEs and global automobile manufacturers.
By creating an attractive business environment and promoting domestic investment by foreign businesses, KOTRA contributes significantly to the promotion of South Korea as a hub for global commerce.

Additionally, it offers complete services for outbound investment by South Korean businesses, as well as inbound foreign direct services.
23 51 Regarding inbound investment, Invest South Korea (IK) offers specialised investment support through its one-stop service, including pre-investment consultation, investment execution, and post-investment process.

KOTRA further promotes South Korea’s investment climate through IK Week, South Korea’s largest international investment forum, by giving potential investors opportunities for business meetings and site visits.
Furthermore, KOTRA supports the settlement of foreign-investment companies in South Korea by providing an Aftercare Service, through the Foreign Investment Ombudsman, and Home Doctor service, among others.

Through its relationships with foreign investment promotion agencies and consultancy companies, KOTRA offers vital outbound investment information to South Korean businesses.
In order to facilitate cross-border merger and acquisition activities, it connects local businesses seeking foreign investment with possible South Korean buyers, primarily for small and medium-sized business deals.

In addition, through partnerships with foreign businesses and venture capitalists, it supports South Korean start-ups and those preparing to establish a business abroad.
Through its Global Human Resource Partnership, KOTRA supports the recruitment of South Korean nationals to work internationally, and to connect foreign expertise with South Korean businesses.

This happens through forums such as Seoul Career Vision, employment forums, and overseas job fairs, where KOTRA facilitates job interviews with foreign companies.
Additionally, Contact South Korea facilitates the recruitment of international expertise, such as engineers, among others, by setting up interviews, as well as advising on the visa application process.

In its promotion of intergovernmental partnerships, KOTRA provides support to economic delegations by developing economic cooperation agenda and hosting economic partnership events for summit diplomacy.
Furthermore, KOTRA promotes the full utilisation of FTAs by advising South Korean businesses and foreign buyers on trade matters emanating from the implementation of these agreements.

In order to accelerate the economic growth of partner nations, KOTRA promotes international development cooperation programmes like the Knowledge Sharing Programme (KSP).

Furthermore, KOTRA operates as a global business think tank in South Korea based on data gathered by more than 125 overseas offices throughout the world.
It provides news on trade and trade regulations, legislation, analyses on the international economy, and investment, as 24 52 well as relevant on-site interviews.

In addition, KOTRA hosts international seminars attracting South Korean and foreign experts in many fields.

4.1.

Invest South Korea (IK) The national investment promotion agency, IK, was founded in 1998 as a part of KOTRA, under MOTIE, to encourage FDI in South Korea.
The Investment Consulting Centre provides administrative support to investors.

In 1999, the Foreign Investment Ombudsman was added to offer aftercare services to international companies.

It was relaunched as IK in 2003, and the Investment South Korea Plaza, a company incubation hub, opened in 2006.

The Foreign Investment Committee is the highest decision-making body for FDI, with IK charged with attracting FDI through the implementation of government strategies and policies.
Initially, it supported only inbound FDI, but since 2018 it supports both inbound and outbound investment.

IK is responsible for promoting South Korea as the preferred destination for FDI, managing projects and providing aftercare services that would enhance South Korea’s position as a global hub for business, innovation and growth.
Currently, KOTRA has a broad global network of 129 offices in 84 foreign countries to be close to their markets, get the most up-to- date information, and create the smallest network for its target businesses.

These include 36 investment promotion offices in 20 nations that are regarded as financial and industrial hotspots for investment promotion; however, this does not imply that KOTRA only encourages FDI from those 20 countries.
Of the 36 investment promotion offices worldwide, 13 are located in Europe, nine in North America, six in China, four in Japan, three in South Asia and Oceania, and one in the Middle East.

4.1.1.

Invest South Korea operations Informed by the Foreign Investment Promotion Act, IK provides a one-stop service from pre- investment to investment stage, to the post-investment stage.

It is led by 14 project managers, that provide customised service to each investor.
These project managers actively participate in investment promotion activities to meet their regional and quarterly investment targets in collaboration with investment promotion officers placed in IK’s overseas offices.

Furthermore, they provide advice on incentives, identify possible investors, connect domestic partners with overseas investors, and produce industry studies.
IK provides prospective investors information on a variety of subjects during the pre- investment phase, including incentives, and on industrial trends.

Additionally, government 25 53 officials assist with visa applications, business registration, and the application of national legislation and local governances.

Regarding the investment stage, it assists investors in choosing company locations and identifying potential business partners and offers administrative support to launch their businesses.
During the post-investment stage, project managers assist businesses in trying to resolve any grievances and challenges faced.

The One-stop system is under one roof, the foreign investor support office, with service providers through cooperation with the Investment Consulting Centre.

The Office of the Foreign Investment Ombudsman ensures that the necessary aftercare service is provided as it is critical in ensuring future reinvestment in South Korea.
These one-stop services are a critical element in preventing investment failure and provides comprehensive support and services for those interested in doing business in South Korea.

The IK Market Place (IKMP) offers a platform that makes it easier for South Korean SMEs, start-ups, and local governments seeking new investment projects to connect.

IK uses the IKMP as a tool to advertise and promote South Korean businesses through its overseas offices to attract foreign capital.
As of February 2023, a total of 290 South Korean companies were registered on the IKMP.

The IK Plaza is another tool that assists foreign companies investing in South Korea and operates as an incubating facility.

It provides dedicated office space, secretarial and reception services, as well as investment consulting services through the Investment Consulting Centre that facilitates the settlement of foreign investors.
As part of the one-stop service, IK provides a Red-Carpet Service to prospective investors such as facilitating site visits and meetings; free accommodation, transport and interpretation services, including airport pick-ups; and fast- tracking services.

Yearly, IK facilitates roundtables and holds job fairs for companies to access local expertise.
During these engagements, investors have an opportunity to address any challenges and may propose policy changes for consideration to resolve any grievances that may have arisen while the company was operating in South Korea.

It is also important for foreign companies to get a better understanding of South Korean culture, and to promote this, IK holds annual cultural events for investors to experience South Korean culture.

26 54 5.
26 54 5.

Site visits in South Korea The following sub-sections provide an overview of the Committee’s site visits within South Korea.

5.1.

Incheon Free Economic Zone The Committee visited the Songdu International Business District, located within the IFEZ.

The IFEZ had become a focus of the government’s initiatives to establish a Northeast Asian economic hub for innovative global business.

The IFEZ consists of three cities, namely, Cheongna, Yeongjong, and Songdu.
The Songdu International City is home to the high-tech knowledge service industry, the Yeongjong International City, home to aviation, logistics, tourism and leisure complex city industries centered around the Incheon Airport, and Cheongna International City, the hub for international finance, distribution, and medical services.

In terms of international trade, the IFEZ is strategically located for export to countries such as China and countries in South America.

The IFEZ was designated as an FEZ in 2003.


The IFEZ has been developed and continues to be developed as a Smart City in a phased approach.

The first phase was the infrastructure construction that was from 2003 to 2009, and the second phase was the platform-based information system integration that was from 2010 to 2016.

Currently, the development was in its third phase which started in 2017 and was expected to be completed in 2030.

This phase includes the identification of industries and new services.
These smart cities are technologically advanced urban areas, which utilise a number of electronic devices and sensors to collect specific information.

This information is used to improve the operational functioning throughout the city, used frequently to manage assets, resources and services efficiently.

To meet local and global demands, national and global companies are collaborating in innovation with major cities and are seeking ways to maintain its competitiveness.
The IFEZ had recognised the importance of creating distinct characteristics in the three cities to lead development on the global financial frontier.

As an example of its pioneering role, the Committee was informed that the Songdu bio-cluster, where all value- chain businesses closely collaborate with one another during all phases of R&D, clinical trials, reliability verification, and manufacturing, provides the IFEZ with a competitive edge.
27 55 Urban Management IFEZ Data Hub Citizen-centric improvement strategies of Public Service Evaluation Problem-solving with smart technologies Public Services upgrade urban issues Service usage Infor m ation In n o v ativ e T ec h n olo g Demonstration Project Evaluation Demonstration Data Provision Product Commercialisation and promotion y Infor m atio ( , n t s a f e t y , Citizen Participation Startup Fostering Source: Incheon Free Economic Zone (2023) Citizen-centric services launching (healthcare, wholesale and retail, parking, etc.)
Going forward, the IFEZ would potentially experience extraordinary innovation faster than anticipated by establishing South Korea’s own Silicon Valley.

Furthermore, the IFEZ promotes radical innovations by future generations and is creating an academic and research ecosystem where research and education are connected to technology.
In addition, because the service industry is growing at an increasingly rapid rate, innovation within IFEZ is continuous and is expanding its territory, merging land, sea and sky.

The main strategy of the IFEZ is to “introduce cutting edge technology” coupled with other services including a port through the Incheon Port Authority; airport through the Incheon International Airport Corporation; and housing through the Incheon Housing and City Development Corporation.
In addition, a global university has a campus within the IFEZ to provide skills, and financial services companies are located in the IFEZ.

The IFEZ Data Hub is an example of the “cutting edge technology”.

It provides a three-way model to deliver 28 56 services and interact with citizens which includes Urban Management, Startup Fostering, and Citizen Participation.

5.2.

DHL Express South Korea (Incheon Gateway) The Committee also visited the DHL Incheon Hub Terminal.
Incorporated in 2001, DHL South Korea Ltd., a subsidiary of Deutsche Post DHL Group, is a global logistics and support company with head offices in Incheon, South Korea.

It provides logistics services including international express deliveries, warehousing solutions, mail delivery worldwide, global freight forwarding and other customised logistic services.

The logistics company is the largest international express in Korea.

It has 1 520 employees, 93% (1 420) of which are permanent employees.
The company has seven dedicated aircrafts daily and 40 commercial flights daily and 518 vehicles transporting goods and documents to various countries and regions in South Korea.

Since the opening of its gateway in 2008, DHL Express has seen a growth of over 45% in shipment volume, indicative of the growing role which the gateway plays in global and intra- regional trade.
DHL has seen significant growth of e-commerce and the logistics business in South Korea, which is expected to continue growing as the third-largest e-commerce market by 2023, following China and the USA.

Despite concerns that the e-commerce boom might be running out of steam in the post-pandemic era, the trend in South Korea appears to be upward over the long run driven by both increased demand, as consumers are fast adapting to online shopping, and supply where business owners seek to branch out overseas.
At the time of the Committee’s visit, the company was constructing an expansion of its facility.

The current facility is 19 946m2 with an investment of €35 million.

The new facility is an additional 59 940m2 in which the company is investing €121 million.

5.3.

HD Hyundai Heavy Industries The Committee visited the HD HHI and received an overview of the HD HHI industries and its evolution to date.
The Committee visited the Asian Memorial Hall that showcased the evolution of the company and was also taken on a site visit of the harbour to experience the extent of it harbour operations in Busan.

The Committee was informed that HD HHI was founded by Chung Ju-Yung in 1972, who also established the Hyundai Construction Company in 1947, and the Hyundai Motor Company in 29 57 1967.
The establishment of the HD HHI and its expansion into shipbuilding had the support of the South Korean Government who at the time was adopting an export-oriented industrial policy.

Mr Chung, being the visionary, recognised the sectors of the economy that the government had identified as being essential to economic growth and structured the evolution of his company accordingly.
Accordingly, his decision to enter the shipbuilding market was met with scepticism, however, HD HHI had received an order to build two 260,000-dead weight tonnage very large crude carriers (VLCCs) from a Greek Industrialist, despite its shipbuilding company being in its infancy stage.

This order had been completed in 1974, at the same time of the completion of the world’s largest shipyard in Ulsan.
A decade after its first delivery, the Hyundai Shipyard topped ten million deadweight tons in aggregate ship production, which has enabled the company to maintain the leading position in the world shipbuilding market ever since.

This laid the foundation for HD HHI to become one of the leading shipbuilding companies globally.
HD HHI, since its success in the shipbuilding industry, expanded its business into various business units, such as industrial plants, other heavy industries such as engine machinery, electro-electric, construction equipment and offshore business development.

This immediate period saw the establishment of the Engine and Machinery Division, and the Heavy Electric Machinery Division, among others.

HD HHI divested from the Hyundai Group in 2002 as part of its ongoing commitment to development and growth.
In 2010, the company expanded its business into the oil and green energy sectors by purchasing the Hyundai Oil Bank, an oil refinery.

A production volume of 100 gross tons was attained by HD HHI in 2012, making it a first worldwide.

According to HD HHI, several of their business units, including the electro-electric system, construction equipment, and green energy sector, had been spun off in 2017 so that they could concentrate on their own enterprises and maintain their financial stability.
The South Korean Shipbuilding and Offshore Engineering (KSOE), a shipbuilding holding company for the HHI Group, was established in 2018 with an emphasis on shipbuilding.

It should be mentioned that the HD Hyundai Group’s Business Portfolio is split into the maritime, industrial, and energy sectors.

HHI, Hyundai Mipo Dockyard, and Samho Heavy Industries are all part of the KSOE (marine) and specialise in shipbuilding and offshore 30 58 development.
The Hyundai Global Services provide aftercare service for the lifecycle of the delivered vessels.

These services relate to retrofitting, or any requirements identified by the owner.

The company provides excellent technical support for all HD HHI supplied vessels, employing a proactive and scheduled maintenance system with the support of professional engineers and qualified technicians.

The newly formed Avikus joined the group to improve the automatic navigation system.
Through its diverse business portfolio, HD HHI informed the Committee that it is augmenting customer satisfaction by attaining synergy.

With a broad product line-up and a differentiated quality management system, HD HHI was currently the market leader in the world of shipbuilding.

It reacts to market and customer demands by timeously developing new ships that are extremely efficient and eco-friendly.
The largest engine producer in the world, HD HHI, has state-of-the-art production facilities and accounts for around 35% of the global two-stroke engine market.

HD HHI informed the Committee that it independently developed and produced two- and four-stroke engines, as well as propulsion systems.

By doing this, they were solidifying their position as the top integrated machine maker in the general industrial and power generating sectors as well.
Additionally, HD HHI was enhancing customer values by delivering market-leading products and gaining technological competitiveness via the development of core technologies centred on the needs of customers.

Health, safety, and environmental management are HD HHI’s top priorities.

To provide a clean and safe working environment, the company actively develops and adopts eco-friendly measures to minimise risk factors.
One of HD HHI’s key advantages is the tight synergistic interaction amongst all its affiliates.

Furthermore, the Committee was informed that through combined sales and material purchases, HD HHI has built an ideal shipbuilding collaboration system with Kunden Depot Dockyard and Kundis Hummel Heavy Industries.

The shipbuilding and maritime industries are also given a boost by HD Hyundai Global Service, which offers turnkey solutions and full after-sale services for engines and ships.
Through improved quality, expansion of local models, and customer support services, HD Hyundai Site Solutions was seeing rapid growth.

5.4.
5.4.

Busan Techno Park (Jisa Complex) 31 59 Busan Techno Park was jointly established in 1999 by the MOTIE, the Ministry of SMEs and Startups, and Busan Metropolitan City, as a non-profit foundation with the purpose of integrating infrastructure for fostering local industries as a regional innovation base for industry, academia, institute and government, and leading the revitalisation of the local economy by exploring and nurturing new technologies.
It leads the development of future industries including biomedical, intelligent information systems and clean energy.

It further provides convergence of local traditional industries, and ICT industries to help Busan become a sustainable growth city.

In particular, the Techno Park’s mandate is to promote and support SMEs in Busan and revitalise local industries and the local economy.
In this regard, it: • Provides testing and accreditation services: o Accredited testing and calibration institution by the Korea Laboratory Accreditation Scheme (KOLAS); o Designated as the International Electrotechnical Commission accredited testing laboratory and accreditation by the Korea Accreditation System (KAS); o Service Quality Certification by the KAS; o Designated as an accredited testing laboratory by the Ministry of Food and Drug Safety (MFDS); and o Established an electric wave testing system for electric vehicles.
• Promotes Innovation Support for R&D: o Tech-Startup Accelerating Programme; o Promotion of National Innovation Cluster; o Power Semiconductor Commercialisation Centre; o Medical Industry Technology Centre; o Big Data Innovation Centre; o Pseudorymised4 Information Support Centre; and o Jisa Science Complex.

• Embarks on strategic planning for Industry-University Cooperation.
Busan Techno Park has seven strategic areas in which its work is based, namely: Table 6: Strategic and focus areas of the Busan Techno Park 4 Pseudonymisation means the processing of personal data in such a manner that the personal data can no longer be attributed to a specific person without the use of additional information.

Such additional information must be kept carefully separate from personal data.
32 60 Strategic Area Focus Areas Planning of Strategic Industrial • Policy planning to foster Busan regional strategic industrial Policy in Busan • Discovering mid to long-term leading projects for future vision • Discovering and planning of future New Industries Industrial Innovation Based on • Expansion of the foundation for regional industry-academia Government-Industry-University cooperation Collaboration • Pioneering technological innovation based on industry- academia cooperation • Support for universities and talents based on regional demand Corporate Support by Growth • Strengthening of an integrated support system for Small and Space Medium Enterprises • Establishment of Industrial Complexes and R&D equipment leasing • Transfer of innovative technology and support for global commercialisation Creating a Digital Transformation • Expansion of infrastructure for industrial digital Ecosystem transformation support and establishment of cooperation system • Activation of technology startup and investment ecosystem • Activation of industrial ecosystem link to Busan Blockchain Regulation Free Zone • Activation of industrial linkages through data-utilisation infrastructure Intensive Nurturing of Future • Improving competitiveness of Future Aviation Industry in leading industrial Busan • Innovation of machine technology related to AI • Leasing innovation in marine and fisheries based on smart technology • Leading the healthcare industry in an aged era (fostering infrastructure industries in preparation for the
 aging society) Promotion of Energy Conversion • Transition to the hydrogen-based energy ecosystem for Carbon Neutrality • Expansion of growth engines based on power semiconductors • Strengthening of corporate support capabilities in the eco- friendly vehicle parts industries 33 61 Strategic Area Focus Areas • Consolidation of the foundation for fostering the safety industry Promotion of Environment, • Future oriented management innovation Society, Governance (ESG) • Establishment of mature labour-management relations based Management on communication • Expansion of organisational integrity • Creation of social value in reflection of the characteristics of the organisation Source: Busan Techno Park (2023) The Techno Park management noted that it currently has 200 tenant companies manufacturing or providing a variety of services such as product identification testing, cosmetics production, power semiconductors manufacturing, and electromagnetic wave testing.
The areas highlighted included: • Ulsan Techno Park Initiative and Support: The Techno Park is an initiative supported by the small and medium venture corporations and the City of Busan.

The central government is called the Ministry of Small and Medium Enterprises and Startups.

Both central government and the metropolitan are invested in the Techno Park.
• Planning of Strategic Industrial Policy in Busan: There is a particular role played by the metropolitan in setting policy, particularly industrial policy.

Industrial policy in many countries is understood to be the responsibility of national government.

The national government is responsible for industrial policy working with the Busan City (and other cities).

The cities/metropolitan areas propose strategic areas they want to focus on to the national government for final decision.
• Collaboration between Government, industry and academia: Government decides on strategic sectors, industry decides what skills are needed to promote these sectors, and through collaboration with universities the requisite skills are developed.

However, it should be noted that the approach is not a top-down approach where government suggests sectors to industry.
Instead, it is a collaborative approach where industry can also propose sectors which the city/metropolitan area can focus on developing to the government.

34 62 • Energy sectors: The Techno Park supports the universities doing research on renewable energy and supports companies producing renewable energy through funding received from the central government.

Currently, the Techno Park is supporting hydrogen and solar energy initiatives/projects.
• Nurturing Industries: The Techno Park provides financial support; R&D support to the university and companies; industrial space and equipment leases at lower prices to companies; and marketing support to ensure that companies attend exhibition shows.

Financial support is approximately US$1 000 to participate in exhibition shows.

Since inception, the Techno Park has provided financial support of approximately US$90 000.

5.4.1.
5.4.1.

Electromagnetic Wave Testing Centre The Committee visited the Electromagnetic Wave Testing Centre at the Busan Techno Park.
The Centre has four categories/industries that it supports, namely: (i) translating national government strategy to Busan strategy, (ii) vehicle testing – provides information and testing services to vehicle manufacturers, (iii) providing information to companies on policy direction of central and Busan government, and (iv) providing electromagnetic wave and reliability testing services.
The Centre is an authentic verification testing institution with two parts, namely electromagnetic wave and suitability testing and reliability testing.

For the electromagnetic wave and suitability testing, it has equipment for such services and provides certification for Korean car manufacturing companies.

For the reliability testing, the Centre performs environment evaluation testing.
It was the first to develop the electromagnetic wave vehicle testing in Korea and performs electromagnetic tests for electric vehicles and excavators.

Its main clients are Kia Korea and Hyundai motor industries.

In addition, it does defence weapons testing.

5.5.

Busan Port Authority (BPA) The Committee visited the BPA which manages the Busan North Port, Busan New Port and Jinhae New Port.
The BPA was established in 2004 to develop the Busan Port as one of the world’s two largest container transhipment hubs.

The BPA is mainly responsible for port construction, port operation, port redevelopment, and port management.
Furthermore, it was mandated to ensure R&D of smart port construction 35 63 technology including the development of Internet of things (IoT) technology between equipment in the port to evolve into an AI port equipped with an optimised cargo handling system, establishment of eco-friendly port facilities including the conversion to eco-friendly loading and unloading equipment, introduction of new and renewable energy within port facilities, and high efficiency of port facilities.
The BPA presented on the history of the Busan Port, its strategic offerings, current developments and future plans.

The Busan Port is strategically located to connect Europe and the Americas.

The Busan Port was first opened in 1876 as South Korea’s first container terminal.
In 1978, the first terminal, the Jaseongdae Terminal became operational, other terminals were opened since, including the Sinseondae Terminal in 1991, Gamman Terminal in 1998, New Gamman Terminal in 2002, and the first phase of a new port in 2006.

The New Port was further developed in stages between 2009 and 2012.
In 2015, the development of phases 2-1 to 2-3 of the New Port included the opening of the Busan Port International Passenger Terminal for the Northeast Asian cruise market, which the BPA is responsible to maintain and operate.
Busan Port has four specialised ports, namely the: • New Port: New Port Northeast Asia International Logistics Centre Port; • North Port: North Port Passenger, Cruise-centred New Marine Tourism Port; • Gamcheon Port: General Cargo and Marine Product Processing Port; and • Dadaepo Port: Fishing Port and Leisure Centre Port.

Since it was first opened, the Port has grown almost 45 times.
In 2021, Busan Port became the world’s seventh largest port after the ports of Shanghai, China; Singapore; Ningbo-Zhoushan, China Shenzhen, China; and Guangzhou Harbour, China respectively.5 It is also the second busiest transhipment hub port, after the Port of Singapore.

It has a global network connecting 500 ports in 100 countries, and 50 shipping companies, with 15 000 ships using the Busan Port annually.
Its state-of-the-art facilities and excellent human resources ensure that the Busan Port provides shipping and port logistics services 365 days a year, 24 hours a day.

In 2017, the Busan Port handled approximately 20 million shipping containers due to its “maximizing the punctuality, efficiency and productivity of shipping services based on four 5 World Shipping Council (2021) 36 64 specialized port facilities”6.
The BPA stated that the Busan Port handled 25 million shipping containers in the 2022/23 financial year.

According to the BPA, it aims to increase the port’s capacity to 30 million shipping containers by 2030, thereby making it the leading global logistics hub.
Of the four port sections that form Busan as mentioned above, the New Port and the North Port have become the major ports in Busan because they continue to be developed while the other ports have reached their peak due to their location (surrounded by residential areas).

The New Port reclaimed land has been designated and is being developed as a free trade zone, the Busan Jinhae FEZ.
The FEZ is a large-scale complex business space with high value-added logistics, incentives and tax benefits, and expanding optimal infrastructure and dock facilities.

This resulted in 69 companies (64 logistics companies, five manufacturing companies) locating in the FEZ.

Companies in the FEZ will have access to logistics, packaging, assembly, and other services.

The development creates quality jobs and revitalises the South Korean economy.

5.5.1.
5.5.1.

Busan Port Strategic Offering The Busan Port is located in between China and Japan, therefore, it is easy for North America and Europe to ship goods to the Busan Port to be redistributed to cities in China and Japan in smaller ships.

It is also globally competitive as it is connected to the rest of the world.

It is well connected to China, Japan, America, and Southeast Asia, which means it is connected to major economies.
In 2021, 54,1% of the container cargo handled in Busan Port was for transshipment, 23% were exports and 22,9% were imports.
Table 7: Busan Port Competitiveness (2021) Service Level of Competitiveness Ranking Transshipment Ports Globally 12 273 (Unit: 1,000TEU7) 2nd largest (the largest is Singapore) Number of Weekly Service in 279 Units 3rd largest (after Singapore and Major Asian Ports Shanghai) Share of Container Volume 22 706 (Unit: 1,000TEU) 1st or largest accounting for 76% of by Domestic Ports all container volume in South Korea 6 7 TEU refers to a twenty-foot equivalent unit, which is a measure of volume in units of twenty-foot long containers.
37 65 followed by Incheon (11,2%) and Ganging (7,1%) Share of Transshipment 12 273 (Unit: 1,000TEU) 1st or largest accounting for 96,7% of Volume by Domestic Ports Source: Busan Port Authority (2022) all transshipment volume in South Korea followed by Gwangyang (2,6%) and Incheon (0,4%) The Port is also deep enough to accommodate the largest ship in the world.
The BPA intends to expand the new port even further, to continue developing the North Port, and to continue investing in overseas logistics infrastructure.

There will also be more container terminals in the west part of the New Port.

This will increase the number of operational berths to 45 berths from 23 berths.
In terms of overseas logistics infrastructure, currently, the BPA has three companies, a logistics company in Rotterdam, Netherlands, started a joint venture; a logistics company in Barcelona, Spain in 2022; and a joint venture with an Indonesian company for a warehouse in Surabaya, Indonesia.

5.5.2.

Government Involvement The BPA informed the Committee that its existence and operations are informed by the government’s policy direction, particularly the MOTIE.
In this regard, as an entity of government they receive support from various government departments and entities including the MOTIE, and the Ministry of Oceans and Fisheries (MOF).

The MOF is the custodian of the port, the BPA needs to seek approval from the Ministry for any development in the port.

The State, Central Government, own the port infrastructure.

The BPA is the landlord to the port operators.

Private companies can lease the land for a period of 30 years with an option to extend by 20 years.
Private companies operate the terminals.

Currently, there are six terminal operators in the New Port.

The ports’ electricity is mainly supplied by the South Korea Electricity and Power Company (equivalent to Eskom).

In addition, a small portion is self-generated through solar panels.

5.5.3.

Investment in the Port South Korea uses public-private partnerships for investment in its ports.
The BPA informed the Committee that Government investment was insufficient for the development required, 38 66 therefore, a public-private partnership strategy had been developed.

As a result, since 1996, the BPA has attracted private sector investment into the Busan Port for the development of the port.

Hence, the government owns the port infrastructure, and private operators own the operating rights.

5.6.
5.6.

Busan Jinhae Free Economic Zones During its visit to the Busan Port Authority, the Committee was also briefed on the BJFEZ and shown a 5D simulation of the FEZ and its future/planned developments.

The BJFEZ was designated in 2003 and is mainly located in two towns, namely Busan and Jinhae of the Changwon, Gyeongnam province, hence its name.

It spans 51,2 km2 covering five metropolitan areas and 23 districts.
Thus far, the development of the FEZ has been completed in 13 districts, with eight districts under development, and two being planned for future development.

The BJFEZ is the second largest FEZ in South Korea after the Incheon FEZ.

It is regarded as the “Global hub for international Business and Logistics” and caters for advanced manufacturing, Pharmaceuticals, Healthcare and Education, IoT and R&D.
Given its location, the BJFEZ takes advantage of and contributes to South Korea’s core business, in particular, the fact that South Korea is ranked first in shipbuilding accounting for 90% of global production; fifth in automotives manufacturing, accounting for 50% of global manufacturing; and sixth in the production of machinery, 40% of global production.
The BJFEZ is surrounded by towns which are strategic for various sectors such as Busan (Port and Automobile), Geoje (Shipbuilding/offshore services), Sacheon (Automobile/Aerospace), Chamgwon (Mechatronics), and Ulsan (Automobile and Shipbuilding).

BJFEZ is the premier logistics hub in Northeast Asia, with the Busan port being the sixth largest port in terms of volume.
BJFEZ is home to about 90% of the world’s top-tier shipbuilders, including HHI, Samsung Heavy Industries, and Daewoo Shipbuilding and Marine Engineering.

It has the world’s seventh largest cluster of auto industries, including subcontractors of automobile companies (Renault Samsung Motors, Hyundai Motor Company, GM, etc.).
The BJFEZ is also a hub of digital industries with value chains of electric vehicles built around Korean Environmental Solutions for e-Mobility (KORENS EM) and a cluster of global companies’ data centres.

The BJFEZ is part of the New Port which is currently being developed and is expected to be finished by 2040.

It is also close and has easy access to the Busan Port which is the largest port 39 67 in the country and one of the largest globally.
Furthermore, it is part of the Gadeok International Airport that is currently being developed with planned completion in 2029 and has easy access to the Gimhae International Airport.

In addition, it has access to road transport.

Therefore, it is referred to as a Logistics Tri-port (Sea-Air-Land).
Table 8: Incentives offered by the BJFEZ Business/ Industry Technologies for New Growth Engine Advanced Manufacturing Reduction Rate 100% 100% 90% 75% Requirements FDI Amount (US$) Over $1 million Over $5 million For manufacturing, material, components, equipment Over $2,5 million Over $2,5 million Over $5 million Over $2,5 million Number of Full Time Employees - Over 200 150-200 - 70-150 Source: Busan-Jinhae Free Economic Zone (2022) Its key incentives include: • 100% rebate on customs duties of imported capital goods for five years.
• 100% rebate on acquisition taxes for 15 years.

• 100% rebate on property tax for seven years and a further three years in Busan, and for ten years and a further five years in Jinhae.

• Cash grants for business operations in the New Growth Engine, High-Technology, Material, Components, Equipment, and R&D sectors, among others.

• Rent reductions (these are shown in the table below along with the requirements for receiving such reductions).

6.
6.

Key observations 40 68 Based on its engagements, the Committee made the following key observations: 6.1 Through the Committee’s meetings with various government officials and agencies, it became clear that the political environment in which the industrialisation programme was implemented, was under President P Chung-hee’s dictatorial leadership.

As a result, the way their industrialisation programme was implemented may not work for countries that operate on democratic principles, such as South Africa.
6.2 The South Korean government adopted a multi-pronged approach to achieve its export- driven industrial policy; it took into consideration all factors necessary to enable industrialisation including infrastructure development, FDI, and business buy-in, as well as skills development.

6.3 During President Chung-hee’s administration, the government prioritised industrialisation and strengthening its ties with the US and Japan, as key elements for South Korea’s economic development and sustained growth.
6.4 Given its lack of natural resources and low industrial base, the development of the South Korean economy was dependent on the social compact between government and business.

6.5 The South Korean government had made an intentional decision to identify and select industries that would serve as the catalysts for industrialisation.

It did so by focusing on these industries’ capabilities rather than the nation’s lack of mineral resources.
6.6 South Korea had benefited from a trading environment that was more accommodating because of the less restrictive rules of the General Agreement on Tariffs and Trade prior to the establishment of the World Trade Organisation (WTO) in 1995.

Prior to 1995, their industrial and trade policies could be implemented with minimal opposition regarding trade regulations, specifically localisation strategies could be applied to both private and public sectors.
Subsequently, local procurement strategies can only be applied to the public sector in accordance with the WTO rules.

6.7 In addition, the Japanese and US governments supported the South Korean economy.

The Treaty on the Basic Relations between Japan and the Republic of Korea, which was 41 69 signed in 1965 and restored diplomatic relations between South Korea and Japan, led to the transfer of skills and support of expatriates who invested in the industrialisation programme.
The US granted unlimited access to its markets for its goods during this period.

6.8 Workers’ rights were severely curtailed during this time.

At the start of the industrialisation in the 1970s, there had been no trade unions nor collective bargaining permitted.

Therefore, during the period, when there were no labour laws in place, the government was free to implement any policies it deemed necessary to acquire low-cost labour without providing any form of worker protection.
However, this gave rise to labour movements that fought to secure greater protection for workers.

6.9 The government provided support to business owners at the time to ensure their participation in the nation’s industrial development, and their support for the development of new industrialists.
In this regard, the government developed and implemented policies to ensure the strengthening of the domestic industry to ensure that the support provided improved industries’ competitiveness, rather than protecting them from competition.

6.10 The government acknowledged that to promote economic growth, investments in infrastructure, machinery, human resources, and innovation would be necessary to meet its industrial goals.

As a result, it made it easier to create products that were globally competitive.
6.11 As a result of its investment in innovation, South Korea was able to develop new industries in which it could have a competitive advantage, and in some cases, became the world leader within those industries.

6.12 Furthermore, investment in education and training was critical to ensure industrialisation and sustainable economic growth.

Therefore, government focused on all levels of education namely primary, secondary, and tertiary.
Particularly, to create the skills and expertise required by the economy, it established relationships between vocational training institutions, universities, and government.

42 70 6.13 It has promoted innovation and skills development within FEZs by linking or locating specific universities that specialise in the focus areas of each FEZ.

Furthermore, government has provided specific financial support for small and medium enterprises for research and development.
6.14 The government recognised that it had to promote the value of vocational training to influence social perception at the time.

Therefore, government provided the necessary incentives to encourage students to pursue vocational training in areas identified as critical for economic development.
6.15 South Korea’s array of free trade agreements with individual countries and economic blocks, including with China, along with its transportation and logistics hubs placed it in a favourable position to be a key trading gateway to Asia and the world.

6.16 Good governance was essential to South Korea’s economic development since it ensured businesses performed well, increased output, and unlocked new opportunities.
Additionally, it decreased risk, promoted quicker growth, and increased reputational clout.

6.17 This increased accountability and transparency was underpinned by greater coordination among all relevant departments and entities, as well as at national and local government led by the President at the time.

6.18 The development of the Korean industrial policies has been people centred.
Therefore, social buy-in by all citizens and business was critical for the success of the implementation of the industrial policies.

6.19 Despite changes in administration, the approach to South Korea’s industrial policy and the focus on identified sectors remained consistent with adjustments to address changes in the landscape, such as technological advances.

This had been essential to its sustained economic success.
6.20 In its designation of FEZs, it was critical for the South Korean government to ensure that the necessary transportation infrastructure was in place.

To facilitate the easy movement of manufactured goods, each FEZ is situated near a port, an airport, or both.

Access to 43 71 ports and airports is essential, as South Korea’s strategic goal is to serve as an international trading hub for exports to China and Japan.
6.21 Coordination and support among the various levels of government were critical elements for the success of FEZs.

6.22 Within FEZs, labour laws are flexible, namely there are no mandatory requirements for people with disabilities, regulations protecting temporary workers are relaxed, and unpaid public holidays for employees are permitted.

6.23 Support for international investors located within FEZs includes easing of tax and foreign exchange laws.
Investors, for instance, are permitted to conduct transactions up to US$100,000 without any obligation to report such transactions.

Investors could be eligible for a tax rebate or receive a waiver from tariffs when importing capital goods for five years.

6.24 South Korea’s FEZs attract more domestic than foreign investors.

This illustrates the flexibility and incentives provided by FEZs that local businesses can take advantage of if they relocate to a FEZ.
6.25 The South Korean FEZs establish communities and facilities for the employees and owners of companies located within the FEZ to ensure that they do not have to travel far to work and amenities.

6.26 South Korea does not focus on the number of FEZs it has established but rather on their effectiveness in contributing to industrialisation and economic growth.

It attributes each FEZs’ success on its location and quality of infrastructure.
Where FEZs are not as successful, the government implements the necessary changes to support their efficient development.

The government is also considering the expansion of successful FEZs and/or their infrastructure.

6.27 Foreign investors can identify an area where they intend to be located to be considered by the government for designation.

Upon designation, this area would attract specific incentives as well.
44 72 6.28 There appears to be a strong public-private partnership approach in South Korea in terms of the development and operation of public infrastructure.

Examples of these are the establishment of the electromagnetic wave testing for electric vehicles.

6.29 In the case of the Busan Port, there is a public-private partnership at the Busan Port with the government owning the port and its infrastructure and private companies operating the port.
This is facilitated through contracts between the Busan Port Authority and the private companies for the provision of services at the port.

7.

Acknowledgements The delegation of the Portfolio Committee on Trade, Industry and Competition wishes to thank H.E.

Ms Z N Dlamini, Ambassador to the Republic of Korea, for the quality of the programme developed by a most competent team.
Furthermore, the Committee would like to thank Ms S Sardha, Economic Counsellor, and Mr K Jin, Marketing Officer, for the excellent support provided during our visit.

Their presence during our visits with government entities and other stakeholders, provided the guidance and clarity when the language barrier become a challenge, with Mr Jin availing himself to provide the necessary clarity and Ms Sardha providing the necessary economic guidance when required.
The Committee also wishes to thank its support staff, in particular the Committee Secretary, Mr A Hermans, the Researcher, Ms Z Madalane, the Content Advisor, Ms M Sheldon, and the Committee Assistant, Ms Y Manakaza, for their professional support and conscientious commitment to their work.

The Chairperson of the delegation thanks all Members for their active participation during the process of engagement and deliberations and their constructive recommendations made in this report.

45 73 8.
45 73 8.

Recommendations Informed by its deliberations, the Committee recommends that the House requests that the Minister of Trade, Industry and Competition should consider: 8.1 Engaging with the relevant Ministries to consider the development of a government-led vocational training strategy to ensure the supply of sector-specific skills that would promote and enhance its current industrialisation drive.
8.2 Engaging institutions of higher learning, both locally and internationally, in conjunction with the relevant Ministries, to encourage the establishment of satellite campuses and/or programmes within Special Economic Zones to support sector-specific skills development for each Special Economic Zone.

8.3 Promoting public-private partnerships in the ownership and/or management of Special Economic Zones and its enabling infrastructure, such as for water, energy and waste management.
8.4 Establishing good governance structures within Special Economic Zones to prevent corrupt activities and maladministration of Special Economic Zones, and to ensure effective implementation to improve investor confidence and attract investment.

8.5 Establishing an inter-governmental co-ordinating body, including provincial and local representatives, reporting to him/her to monitor progress in the development of Special Economic Zones and to unblock challenges as they may arise.

Report to be considered.


References 46 74 Busan Techno Park (2023).

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Presentation to the Portfolio Committee on Trade, Industry and Competition, Busan: 14 April.

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https://www.worldshipping.org/top-50-ports 47 75 JULY 2023 JOINT STUDY TOUR REPORT: REPUBLIC OF KOREA Select Committee on Health and Social Services Select Committee on Education and Technology, Sports, Arts and Culture 76 TABLE OF CONTENTS 2.1 2.2 2.2 2.1.1 PART 1: INTRODUCTION ..............................................................................................................................3 Delegation ...........................................................................................................................................3 1.1 1.2 Arrival in Seoul, South Korea ..........................................................................................................4 1.3 Meetings Held During Visit ...............................................................................................................4 PART 2: SC ON HEALTH AND SOCIAL SERVICES ...................................................................................5 Background .........................................................................................................................................5 Aim and objectives ......................................................................................................................6 Korean NHI System ..........................................................................................................................6 2.1.1 How was it started?.....................................................................................................................6 2.1.2 What does this mean?
...............................................................................................................7 2.1.3 Who are the role-players?

........................................................................................................8 2.1.4 What challenges does it face?
..................................................................................................9 Key Stakeholders ..............................................................................................................................9 2.2.1 MoHW .......................................................................................................................................9 NHIS ........................................................................................................................................10 2.2.2 HIRA ........................................................................................................................................11 2.2.3 Samsung Medical Centre .......................................................................................................11 2.2.4 PART 3: SC ON EDUCATION .......................................................................................................................13 3.1 Background .............................................................................................................................................13 3.2 Aim and Objectives .................................................................................................................................13 Korean Education System ................................................................................................................14 3.3 3.3.1 Ministry of Education
 .............................................................................................................14 Korean Research Institute for Vocational Education and Training (KRIVET) ................15 3.3.2 Haemil Elementary School.....................................................................................................16 3.3.3 Korean Educational Development Institute (KEDI) ...........................................................16 3.3.4 PART 4: KEY OBSERVATIONS AND RECOMMENDATIONS ................................................................17 General Observations .......................................................................................................................17 Health Sector Focus ..........................................................................................................................18 Education Sector Focus ....................................................................................................................18 Recommendations ............................................................................................................................19 PART 5: CONCLUSION .................................................................................................................................20 APPRECIATION .............................................................................................................................................20 BIBLIOGRAPHY
BIBLIOGRAPHY ............................................................................................................................................20 4.1 4.2 4.3 4.4 LIST OF FIGURES Figure 1: Schematic presentation of the governance of the Korean NHI system ...................................................... 8 Figure 2: Schematic presentation of the Korean security system ............................................................................ 10 2 77 REPORT OF THE SELECT COMMITTEE ON HEALTH AND SOCIAL SERVICES AND THE SELECT COMMITTEE ON EDUCATION AND TECHNOLOGY, SPORTS, ARTS AND CULTURE, OF THE JOINT INTERNATIONAL STUDY TOUR TO THE REPUBLIC OF KOREA FROM 03 TO 07 JULY 2023, DATED 05 SEPTEMBER 2023 The Select Committee on Health and Social Services, and Select Committee on Education and Technology, Sports, Arts and Culture (henceforth, the Committees) having conducted an international study tour to the Republic of Korea (South Korea) from 03 to 07 July 2023, report as follows: PART 1: INTRODUCTION 1.1 Delegation A delegation of the Select Committee on Health and Social Services, and Select Committee on Education and Technology, Sports, Arts and Culture (henceforth referred to as the Select Committee on Education) undertook an international study tour to the to the Republic of Korea (South Korea) from 03 to 07 July 2023.
The delegation comprised of the following individuals: Members of Parliament (Province) Mr E Njadu (Chairperson: SC Health & Social Services) Western Cape Mr E Nchabeleng (Chairperson: SC Education) Ms EN Nkosi Ms N Ndongeni Mr MR Bara Ms D Christians Ms SA Luthuli Parliamentary Support Staff Ms M Williams Ms T Ketye Limpopo Mpumalanga Eastern Cape Gauteng Northern Cape KwaZulu-Natal Committee Secretary Content Advisor 3 78 1.2 Arrival in Seoul, South Korea The delegation was met by Ms Ntombikayise Msibi, the First Secretary: Political and Mr Xolani Ngubane: Corporate Services Manager, from the South African Embassy, at Korea’s Incheon International Airport on 01 July 2023.
The delegation stayed at the Conrad Hotel in Seoul for the duration of their visit.

Ms Msibi accompanied the delegation to all the meetings held from 03 to 07 July 2023.

1.3 Meetings Held During Visit To achieve the aims and objectives of the study tour, the Committee held meetings with various stakeholders in South Korea.

The delegation met the South African Ambassador to South Korea, Ms Zenani Dlamini, who welcomed the South African delegation.
The Ambassador went through the study tour programme with the delegation and shared some historical information about the relationship between South Africa and South Korea and protocol.

The Chairpersons expressed their appreciation to the Ambassador and Embassy Officials for the introductory meeting and expressed their appreciation for the engagement.
The delegation held individual meetings with the Chairperson of the Parliament Health Committee, Dr Shin Dong-Kun and the Chairperson of the Parliament Education Committee, Mr Kim Cheol-Min, respectively at the National Assembly in Yeongdeungpo-gu.

The delegation visited and met with various representatives and stakeholders of both the Koreans’ health care and education systems.
This included the Director-General of the Ministry of Health and Welfare as well as the Director-General responsible for the Public Education Policy Bureau.

The following institutions were visited to gather information on the Korean health care system: • Ministry of Health and Welfare in Sejong City, • National Health Insurance Service (NHIS) in Wonju City, • Health Insurance Review and Assessment (HIRA) Service in Wonju City and • Samsung Medical Centre in Gangnum-gu.
The following institutions were visited to gather information on the Korean education system: 4 79 • Korean Research Institute for Vocational Education and Training in Sejong City, • Haemil Elementary School in Sejong City, and the • Korean Educational Development Institute in Jincheon-gun.

The mode of information sharing was largely through PowerPoint presentations followed by discussions where the Members of Parliament would be given an opportunity to ask questions on issues raised in the presentations.
In some instances, booklets were made available to learn more about topics of interest to the delegation.

Information presented in this report therefore comes from the presentations and the booklets provided to the delegation on these two crucial topics.

PART 2: SC ON HEALTH AND SOCIAL SERVICES 2.1 Background Countries around the world have made a commitment to achieve universal health coverage (UHC).
The World Health Organization (WHO) identified quality essential services as the primary means to achieve UHC, in line with the third SDG which is “to ensure healthy lives and promote well-being for all, at all ages” (United Nations, 2015).

The Committee embarked on a study tour to observe and learn from the best practice performance on the National Health Insurance (NHI).
The Committee’s decision to undertake a study tour was preceded by the comparative research study on international best practice of the healthcare systems of seven countries, which included Canada, China, Japan, Republic of Korea, Finland, Norway, and Rwanda.
The study tour to the Republic of Korea (hereinafter, Korea) is in line with the strategic plan of the Sixth Parliament of the Republic of South Africa 2019-2024, the Committee’s Strategic Plan 2019- 2024, the Parliamentary Oversight and Accountability Model (2012), the National Development Plan (NDP): Vision 2030, and the third United Nations Sustainable Development Goal (SDG) 3.
5 80 2.1.1 Aim and objectives The aim of the study tour was to learn the best practises in the healthcare system of the Republic of Korea by focusing on its national health insurance system, healthcare coverage, how the NHI system is funded, and the services provided by the NHI system fundamental institutions such as National Health Insurance Service (NHIS) and the Health Insurance Review and Assessment Service (HIRA).
The objectives of the study tour to Korea were: • To explore and learn how the government of Korea has achieved its health care coverage under the NHI system, • To explore and learn how the government of Korea is funding its NHI system to the benefit of its citizens, • To explore and learn how the NHI system is provided by the different stakeholders or fundamental institutions i.e., the HIRA which is responsible for the Korea’s health insurance evaluation and analysis service, and the NHIS which provides for the Republic of Korea’s national health insurance service.
This will enable the Committee to understand the mechanism of the Republic of Korea’s health system.

The healthcare industry of South Korea is mainly governed by the Ministry of Health and Welfare (MoHW).
These government authorities are concerned with the healthcare service at large, including the enforcement of healthcare-related laws and regulations, administrative review of healthcare professionals, certification of medical institutions, mediation of medical disputes, sanctions on illegal rebates involving pharmaceutical products and medical devices, national health insurance, pricing and reimbursement, safety management of pharmaceutical products (including bio products) and medical devices, and the overall management of clinical trials.
2.2 Korean NHI System 2.1.1 How was it started?

The Republic of Korea first introduced NHI in 1977.

In 1989, the NHI system was expanded to cover all citizens- thus achieving UHC within 12 years.

6 81 Healthcare in South Korea has two pillars – a medical aid component which covers about 3% of the population, and the National Health Insurance System (NHIS) which covers about 97% of the population.

Thus, healthcare is funded through the NHIS.


This system of NHI was developed by government with three main guiding principles set as health policy, namely: compulsory coverage; contributions based on individual income; and benefit levels independent of individual contributions.

2.1.2 What does this mean?

The NHI programme in South Korea is a public insurance system that is premised on UHC.
This means that all people and communities can use the promotive, preventive, curative, rehabilitative and palliative health services they need, of sufficient quality to be effective, while also ensuring that the use of these services does not expose the user to financial hardship.

The key success factors of Korea’s NHI scheme are based on the following components: (a) Socio-economic conditions.

Korea has successfully achieved rapid economic growth.
The resources required to run the NHI programme are derived from insurance contributions paid by the insured and their employers (as applicable), government subsidies and other income (such as fees for delinquent payments and other penalties).

(b) The design of the NHI scheme.

At its launch, health insurance began with low levels of contribution, benefits, and reimbursement owing to the poor financial condition of the government.

The current NHI system is the result of expanding coverage systematically.
(c) The development and implementation of NHI policy.

The NHI programme is governed by the National Health Insurance Act and the key features of this statute are as follows: • The NHI programme is compulsory when certain legal requirements are met, and the payment of insurance contributions becomes mandatory.

• Insurance contributions are imposed according to ability to pay (i.e., depending on income level).
• Regardless of the level of the insurance contributions paid, insurance benefits are paid equally regarding the scope and level of insurance coverage.

• All medical institutions are required to join the NHI programme (that is, no opt -out is allowed).

Thus, the government imposes mandatory participation, as legal obligation for both insurers and providers, and insurers must provide NHI services.

7 82 (d) Strategic, gradual implementation.


The step-by-step expansion of coverage took into careful consideration the insured’s ability to pay and the insurer’s administrative capacity.

By gradually expanding population coverage, Korea established the NHI 12 years after the introducing the NHI.

(e) The use of information technology.

In Korea, the government operates the residential identification system.
This technology makes efficient management possible, enabling eligibility criteria management, imposition, collection, benefit management, claim review, etc.

2.1.3 Who are the role-players?

There are various stakeholders involved in the healthcare industry in the Republic of Korea.
These include medical institutions; healthcare professionals; patients; manufacturers, importers, and sellers of medical devices and pharmaceutical or biotechnolog y products; insurance companies; government authorities, including the MoHW, National Hospital, the National Health Insurance Service (NHIS), the National Medical Centre, the Korea Institute of Drug Safety and Risk Management, the Health Insurance Review and Assessment Service (HIRA), and the Korea Disease Control and Prevention Agency, and academic institutions for healthcare professionals.
MoHW (Policy & Supervision) Figure 1 HIRA (Claim reviews) Review results NHIS (Single insurer) Pays premium Medical insurance Health service Users NHIS Pays Healthcare Providers Healthcare service / Co-payment Figure 1: Schematic presentation of the governance of the Korean NHI system 8 83 The delegation met with representatives of the MoHW, NHIS and HIRA.

2.1.4 What challenges does it face?


The system has seen substantial growth in the duration of hospital admissions per insured person and the number of days spent receiving outpatient care, over the years.

In addition, there has been an expansion in medical facilities and an increase in the number of hospital beds, particularly in higher-tier medical institutions.

However, there remains a gap in terms of the healthcare workforce available to the population.
The Korean healthcare system has seen a rise in the use of advanced medical equipment, which contributes to the soaring healthcare costs that cannot be overlooked.

It was noted that newly trained doctors prefer to specialise in services that are not covered by the NHI – where the State cannot control pricing.

These services include cosmetic surgery and dermatology.

2.2 Key Stakeholders 2.2.1 MoHW The MoHW is responsible for making policy decisions regarding the NHI system.
For example, the MoHW determines the insurance contribution rate, the standards for the imposition of insurance contributions, and the scope of healthcare benefits subject to insurance.

The MoHW is the authority managing and operating the NHI system and thus oversees the NHI system and its two fundamental institutions – the NHIS and HIRA as shown in Figure 1.

This involves approving the budget and regulations of the NHIS.
The MoHW implements a variety of social security programmes to ensure a basic standard of living, and to raise the overall quality of life for all citizens.

The Korean social security system provides social insurance, public assistance, and social welfare services.
9 84 Social Insurance Public Assistance Social Welfare Service •National Pension Scheme •NHI Scheme •Employment Insurance •Industrial Compensation Insurance Accident •National Basic Livelihood Security System •Medical Aid •Veterans Relief •Disaster Relief Figure 2: Schematic presentation of the Korean security system the for •Programmes disabled •Programmes for the elderly •Programmes for women & children As shown in Figure 2, the Korean health security system has two components, namely: mandatory social health insurance and medical aid.
The NHI system ensures UHC.

The main sources of NHI funding include contributions from insured health service users and g overnment subsidies.

Healthcare providers may not refuse to treat NHI patients, and all enrolees pay monthly contributions.

Healthcare services can be provided by a variety of healthcare providers, including clinic -level medical institutions and hospital-level medical institutions, and citizens can choose the providers from which they wish to receive their healthcare services.
The licensing, establishment and operation of healthcare providers is governed by the MoHW pursuant to relevant laws and regulations such as the Medical Care Assistance Act.

In principle, the medical benefits system provides support for medical expenses for items specified in the NHI Medical Benefits Criteria published by the MoHW.
Certain co-payment requirements may apply, as well as restrictions on the number of days during which medical benefits or treatment procedures can be received as shown in Figure 1.

Thus, all Koreans except those belonging to the lower income group enrol to the mandatory health insurance.

The medical aid programme is a form of public assistance that uses government subsidies to provide low-income groups with healthcare services.

2.2.2 NHIS The NHIS serves as the single insurer of the NHI system.
The responsibilities of the NHIS include the management of qualification criteria of health insurance subscribers and their dependants; the imposition and collection of insurance contributions; the management of insurance benefits; the implementation of national health check-ups, disease prevention and health promotion related work; payments to medical institutions; the determination of drug 10 85 prices through negotiations with pharmaceutical companies; and the execution of pricing contracts with pharmaceutical companies.
In line with the NHI Act, the Health Insurance Committee has the responsibility for setting the contribution rate for the insured within the range of 7% (3.5% directly from the employee/health service user and 3.5% from the employer) of monthly income.

Contributions are calculated by using a formula in which the insured person’s properties, income, motor vehicles, age and gender are taken into consideration.
The government subsidises about 50% of total expenditures relating to the payment of benefits for the self-employed insured and related administrative costs.

2.2.3 HIRA The HIRA sets the scope and standard of services covered by the NHI, manages healthcare resources, evaluates the cost and quality of healthcare services through advanced information and communication technologies (ICT).
The responsibilities of the HIRA include the assessment of medical care costs and the appropriateness of the healthcare benefits, and the development of the review and assessment criteria.

In short, HIRA conducts claim reviews and the quality assessment of healthcare services.

As shown in Figure 1, healthcare providers submit claims to HIRA.

This is done through a web - based medical claim portal service.

HIRA uses an ICT system to automatically check for errors, omissions and/or miscalculations.
Subsequently, an electronic claim review is conducted based on pre-determined criteria.

HIRA then submits the results to the NHIS where reimbursement for providers is processed.

2.2.4 Samsung Medical Centre The Samsung Medical Centre is one of Korea’s most renowned hospitals.

It was established in 1995, with the goal of focusing on patient and customer satisfaction.
It offers specialised treatment for cancer through the Samsung Comprehensive Cancer Centre; heart conditions such as vascular strokes, angiographies, acute myocardial infarction, and aortic aneurysm are treated through the Heart Vascular Stroke Institute.

Other specialised services include the treatment of 11 86 brain tumours; organ transplants; and the provision of exclusive treatment to high -risk mothers and neonates (newborns) at the Mother-Child Intensive Care Centre.
The Centre has 9200 outpatients; 1200 inpatients; 210 emergency patients and 196 surgical patients daily.

The facility offers 1989 beds, 56 operating rooms nd 188 intensive care unit (ICU) beds.
To provide the best medical services possible, for international patients, there is an International Healthcare Centre which offers the following: • Specialised clinics for international patients, • Physicians that are fluent in English, • Interpretation services which include Arabic, Chinese, Mongolian and Russian.

• Discounted accommodation at nearby hotels and transportation services.
Other services include the Health Promotion Centre, which conducts health check-ups; and a Research Institute for Future Medicine which entails a Bio Bank and conducts various clinical and biomedical research.

The delegation visited the Samsung Comprehensive Cancer Centre and Bio Bank.

The Cancer Centre provides an integrative education programme to help cancer patients to receive effective treatment and maintain good health.
The cancer types that are treated at the Centre include breast, colon, uterine, gastric, Non-Hodgkin Lymphoma, liver, lung, and pancreas cancer.

The Centre’s wellness programme is divided into the following categories: • Cancer treatment.

This includes chemotherapy, radiotherapy and managing altered appearance after treatment.

• Symptoms management.

This includes pain management.

• Psychosocial support.


This includes hospice-palliative care and practical ways of dealing with problems and guidelines for managing physical, social, emotional, and psychosocial health and diet.

• Cancer prevention.

New cancer patients and their families receive orientation so that they receive reliable information about the different stages of the diseases and treatment, and to help them understand 12 87 the cancer diagnosis.

Family members of cancer patients learn about how to care for the patients.
In addition, patients receive support to help them return to work successfully after cancer treatment.

For the rapid recovery of patients, the Samsung Cancer Centre uses advanced treatment technologies such as various non-invasive methods listed below: • Robotic surgery for prostatectomy, • Video-assisted thoracoscopic surgery for lunger cancer, • Single port laparoscopic surgery for colon cancer and • Radiofrequency thermal ablation therapy for liver cancer.
• Innovative radiotherapy that uses preexisting x-ray and gamma ray, proton therapy to provide the best precision and accuracy for minimising errors which are less than 1mm from tumour cells and minimises the amount of radiation that is applied to normal tissue so that adverse effects and possibilities of having secondary tumours can be lowered.
PART 3: SC ON EDUCATION 3.1 Background The study tour was guided by the priorities as set in the major government plans such as the National Development Plan: Vision 2030 (NDP) and the Medium-Term Strategic Framework (MTSF) 2019– 2024.

The following are the key outcomes as stated in the NDP, which guided and informed the Committee’s oversight work: • Quality basic education.

• A skilled and capable workforce to support an inclusive growth path.
• A diverse, socially cohesive society with a common national identity.

The focus for the SC on Education is explore best practises in the education system, including early childhood development (ECD), Mathematics and Science.

3.2 Aim and Objectives The aim of the study tour was to learn the best practises in the education system of the Republic of Korea by focusing on maths and science education, early childhood development and literacy.
13 88 The objectives of the study tour were: a) To explore and understand the South Korea public education system.

b) To explore and understand the South Korea maths and science education advancements.

In addition, the delegation engaged with stakeholders on the following: • The funding of basic education.

• School structure.

• Parental involvement in education of their children.

• Provision of special education and special schools.

• Pass rate in Mathematics and Physical Science.


• Management of scholar transport.

• Competency of teachers and lecturers, and their qualifications.

• How to avoid mismatch of skills (skills needed by the industry and those supplied by the Technical and Vocational Education and Training (TVET) Colleges).

• Employability of their graduates.

3.3 Korean Education System 3.3.1 Ministry of Education The government spends 14% of its total budget on education.
Korea’s education system has been the driving force for the country’s rapid economic growth.

This has led to highly skilled human resources that can quickly learn advanced technology and develop independent, efficient, and effective systems.

The educational administration has a dual structure with the Ministry of Education of the central government and local government offices of education.
School education policies are taken control of by the Ministry of Education at the national level and by 17 local offices of education.

In South Korea, education is funded by the government, thus education up to high school is free.

Students are offered various forms of support to enable them to perform at their best.

This is premised on ensuring that all students achieve a basic level of education.

14 89 South Korea uses a 6-3-3-4 single ladder education system.
That is, six years in elementary school, three years each in middle school and high school, and four years in university.

The nine years of elementary and middle school are compulsory, but from high school and beyond, students choose an education path in line with their career choice.

The government implements policy to fully support ECD.

This has been done by establishing more public kindergartens and funding the “Nurri Curriculum”, which is the nationwide curriculum for children aged 3 to 5 years.
Considering the rapidly changing environment, the Korean government is pursuing the transition to “green smart schools of the future”.

This is aimed at tailored education, enhanced school autonomy, renovating and remodelling deteriorated school facilities, and innovative teaching methods that include the expansion of artificial intelligence (AI) education.

With regards to vocational education, the Korean government has established an employment support system.
This is to ensure that students get a job that is related to their major after receiving vocational education.

There is a Central Employment Support Centre that finds decent vacancies for students and shares information with the Employment Support Centre of the Office of Education.

In addition, schools have an employment support manager who provides career guidance to students, to match their aspirations and specialisations.
3.3.2 Korean Research Institute for Vocational Education and Training (KRIVET) KRIVET was established in 1997 as a research institute focused on national human resource development.

Thus, it mainly conducts research on national policies for human resource development and to support the implementation of national policy.

In addition, KRIVET fulfils the following functions: • Supports the network of stakeholders in TVET and Human Resource Development (HRD).
• Conducts research on TVET as part of lifelong learning for all and carry out related projects.

• Develops and propagates programmes for TVET as part of lifelong learning.

• Conducts research on national and private qualification systems and facilitate related projects.

• Evaluates TVET institutes and their programmes upon the government’s request.

• Provides information and career counselling for employment and career development.
• Establishes and manages a system for collecting information and analysing the labour market trends on a regular basis.

• Promotes international exchange of information on TVET.

15 90 • Collects, organises, and disseminate information on TVET.
KRIVET continues to conduct research on topics such as ‘Reform of public education with classroom revolution’, ‘Restoration of the hope ladder of education’, ‘Improvement of the quality of higher education and innovation of lifelong vocational education,’ to maximize the government’s policy outcomes.

3.3.3 Haemil Elementary School Haemil elementary is a public school, that opened its doors in 2022.

It was built alongside a middle school, high school, park, and community centre.
The cost of the school went over the regional budget by 30%.

The school structure comprises a principal, 100 teachers and approximately 1000 scholars.

The school has two teachers with nursing certificates resident in the sick bay of the school, fitted with 3 beds.

School hours are from 9am to 2pm.


The school is fitted with two computer labs, aftercare classes, 3 science laboratories including one for after school, a cooking class fitted with kitchen equipment, a library that offers a reading class and an auditorium.

This is in addition to its normal classes for Grades 1 to 6.

This state-of-the-art elementary school also has a cafeteria- meals are provided free of charge and subsidised by the government, and heated floors.

A counselling office is also on campus.


Thus far the school has had 200 guests from all over the world including Canada, the Emirates and the United States of America.

3.3.4 Korean Educational Development Institute (KEDI) The KEDI was established in 1972 and played a crucial role in the development of a new educational system.

In the 1980s, KEDI has played a leading role in educational reform.

In the 1990s, KEDI was redesigned as an educational policy research institute.
Over the years KEDI has led innovation in the educational system with a focus on the direction of future education, strengthening data-based policy research and conducting interdisciplinary and convergence research.

Its goals and strategies are: • To become a strong platform for educational reform policy and field innovation.

• To promote the value of future education and strengthen research and development capacity in innovation education.
16 91 • To enhance international status through strengthening global collaboration in educational research and development.

• To strengthen the organizational capacity for innovation.

KEDI strives to establish new education system reflective of traditions and realities of Korea and to develop an innovative educational system to address challenges of Korean education.

In addition, KEDI conducts comprehensive and scientific research on current issues of Korean education.
Some of its research involves life-long education for adults, to enable adaptability in changing environments.

KEDI has autonomy but works closely with the Ministry of Education (and other institutions) in relation to curriculum development.

The Ministry of Education plays a leading role in curriculum development.

PART 4: KEY OBSERVATIONS AND RECOMMENDATIONS The Committee, having undertaken an international study tour to the Republic of Korea, made the following observations and findings.
4.1 General Observations • The Republic of Korea’s economy is among the ten largest in the world and this is notwithstanding the fact that it does not have a lot of natural resources, hence there is a strong emphasis on human capital to ensure economic prosperity.

The country has a less than two per cent unemployment rate which is highly commendable.
• In the Republic of Korea, there is emphasis on meritocracy and being highly skilled, human values, ethical development, creativity, care for others and the environment.

• The Committee notes that visa renewal delays experienced by Korean citizens in South Africa were raised throughout the study tour.
• The Committee notes that the Republic of Korea has entered the race to host the 2030 World Expo which it would like to host in Busan and encourages the Republic of South Africa to consider supporting it in this endeavour.

17 92 4.2 Health Sector Focus • The Republic of Korea focuses on equity and non-profitability.

A good standard of health care that is accessible to all is what drives the health sector.
Thus, the health system is premised on the following: o Ensuring that everyone who needs health services gets them, not only those who can pay for them.

o Ensuring that the quality of health services is good enough to improve the health of those receiving services.

o Protecting health service users against financial risk by ensuring that the cost of using services does not put people at risk of financial harm.
• The NHI is the central component of the operation and funding of healthcare services in South Korea.

Within the NHI system, insurance enrolment and payment of insurance contributions are mandatory, and the amount of the insurance contributions is determined based on the income level of the insured user.

• There law is enforced by the State and prices are set by the MoHW.
• Application of ethical research methodologies and implementation of ongoing educational training initiatives are key components to ensuring an effective health system and healthy nation.

4.3 Education Sector Focus • The Republic of Korea has an incredible education system in place, made possible by a high degree of investment research and development.
Education was the second largest expenditure item behind Health and Welfare services in the national budget of the Republic of Korea for the current financial year.

• The Republic of Korea provides free education to elementary and middle school students while college students’ tuition is subsidised.

Elementary and middle schools are governed by the local government authorities.

Colleges fall under the jurisdiction of the central government.
• Science communication initiatives are imbedded in all levels of education, starting with early childhood development.

18 93 4.4 Recommendations The delegation, having concluded their international study tour to the Republic of Korea makes the following recommendations.

(a) Government initiatives should be based on ethical and sound research, monitoring, and evaluation.

Departments should submit reports of implemented efficiencies to the respective Parliament Committees.
(b) Government departments should work closely with industry organisations, garner investment and find ways of collaborating on innovative initiatives that will improve education and health sector goals for the betterment of the country.

(c) Government departments should share summary reports of local and international feasibility studies that have been conducted.

The reports should include key lessons from those studies, the department’s plan of action and progress.
Those reports should be submitted to the respective Parliament Committees.

(d) The Department of Health should provide more information to the Committee and the public on the following: • How the proposed NHI Bill will ensure an improved health care system.

• The envisaged role the private health sector will play in the rollout of NHI.

• The estimated timeframes to realise UHC.

• What the different phases of implementation will entail.
• The implications of not implementing NHI as set out in the proposed Bill.

• Cost estimates for the different phases of implementation.

(e) Parliament, through its relevant committees, should monitor the implementation of health policies and legislation, including the NHI.

(f) The Education Departments (DBE and DHET) should align curriculum development and skills training to the needs of industry and the economy.

This will contribute to the country’s economy and the employment of graduates.
19 94 PART 5: CONCLUSION The report introduced the purpose, aims and objectives, and how the information presented in it was collected.

It thus provided an overview of the Korean healthcare and education systems.

In doing so, it first provided some lessons from Korean NHI system.

Then, it presented some recommendations for the Committee to consider when deliberating on matters related to the tabled NHI Bill.
The report also provided information on the Korean education system in relation to the sites that were visited and meetings that were held.

This was followed by an overview of elementary education, STEM subjects and vocational education.
APPRECIATION The delegation, led by Mr E Njadu MP (Chairperson: Select Committee on Health and Social Services) and Mr E Nchabeleng, MP (Chairperson: Select Committee on Education and Technology, Sports, Arts and Culture), would like to thank all stakeholders for the support given during the study tour.
Having undertaken the study tour to the Republic of Korea, the Select Committees recommend that the House endorse the joint study tour report of the Select Committees on Health and Social Services, and Education and Technology, Sports, Arts and Culture.

BIBLIOGRAPHY For more information or to access policy, planning and research documents refer to the following sources.

• Department of Planning, Monitoring and Evaluation (DPME).

2019.

Medium Term Strategic Framework, 2019-2024.


The Presidency, Pretoria.

Accessible from: https://www.dpme.gov.za/keyfocusareas/outcomesSite/Pages/mtsf2021.aspx.

• Health Insurance Review and Assessment Service (HIRA).

Accessible from: https://www.hira.or.kr/eng/main.do.

20 95 • Korean Educational Development Institute (KEDI).

Accessible from: https://www.kedi.re.kr/eng/kedi/main/main.do.

• Korea Research Institute for Vocational Education and Training (KRIVET).
Accessible from: https://www.krivet.re.kr/eng/eu/index.jsp.

• Ministry of Education.

Accessible from: https://english.moe.go.kr/main.do?s=english.

• Ministry of Health and Welfare.

Accessible from: https://www.mohw.go.kr/eng/.

• National Health Insurance Service (NHIS).

Accessible from: https://www.nhis.or.kr/english/index.do.

• National Planning Commission.

2011.

National Development Plan 2030 - Our Future, Make it Work.

The Presidency, Pretoria.


Accessible from: https://nationalplanningcommission.wordpress.com/thenational-development-plan/.

• Samsung Medical Centre.

Accessible from: https://www.samsunghospital.com/gb/language/m_english/main/index.do.

• Republic of South Africa.

1996.

Constitution of the Republic of South Africa, Act No.

108 of 1996.

Accessible from: https://www.gov.za/sites/default/files/images/a108-96.pdf.

• United Nations (UN).

2015.

Sustainable Development Goals (SDGs).


Accessible from: https://www.un.org/sustainabledevelopment/sustainable-development-goals/.

• World Health Organisation (WHO).

2021.

UHC Fact Sheet.

Accessible from: Universal health coverage (UHC) (who.int).

• WHO.

2021.

Republic of Korea, Country Health Information Profiles.

Accessible from http://www.wpro.who.int/countries/kor/.

Report to be considered.

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