KLRI : KOREA LEGISLATION RESEARCH INSTITUTE

I. Background and Purpose of Research

▶As  the  United  States  transitions  into  the  New Space  era,  private  companies  are  securing  technological  capabilities  that  surpass  NASA and Space  projects  by  private  investment  are  being  implemented  more  actively  due  to  symbolic  events.

○Our  country  also  needs  to  establish  a  new  space  industry  development  plan  as  the  ‘ROK-US  Missile  Guidelines’  are  abolished  in  2021. We  had  the  opportunity  to  enter  the  advanced  space  nation  in  the  new  space  era  through  various  means.  Efforts  are  being  made  to  establish  policy  and  institutional  foundations.

-To  this  end,  we  established  an  Aerospace  Agency  dedicated  to  space-related  policies  to  provide  long-term  and  consistent  national. By  laying  the  foundation  for  the  promotion  of  key  policies,  we  will  ensure  smooth  promotion  and  active  operation  of  space  policies. Conducting  a  review  of  various  measures  and  means  for. 

▶ Short-term results creation due to the existing system in which the space industry has been led by the government and the characteristics of space business. Considering the limitations of this difficulty, it is time to establish an institutional foundation as a more specific activation plan.

○ This study examines policies and systems related to space development in major countries including Korea, and based on this, identifies limitations and problems in activating private space projects in the current domestic operating system and systems, and based on this, develops future strategies. 

-In the current system, systems for promoting space development are in place and operated, but in the case of national research and development projects, there are many restrictions and difficulties when private businesses participate, so we are seeking ways to improve the system to encourage private businesses to participate.

- Developing measures to encourage participation in research and technology development projects that contribute to the revitalization of the space industry through the fostering of space businesses.

▶ This study provides support measures for research and technology development by private space operators to revitalize Korea's space industry.

○ We will examine the current status and reality of the operation of private space projects, as well as related systems, and analyze the current status, including the operational status of major countries.

- Developing a plan to improve the system to vitalize the domestic space industry by establishing a system that allows for the active participation of domestic private space operators.

 

Ⅱ. Contents

▶ The aerospace industry is one of the representative system-integrated industries, and is a field with great technological ripple effects. It is an industry with high complementarity between civil and military dual-use technologies, so its importance is high. It is an industry based on typical intensive and R&D engineering, so its added value can also be greatly increased.

○ In the case of the domestic aviation production industry, it is showing a very high annual growth rate of 14.6%, and the added value of the aerospace manufacturing industry is increasing by 14.9%, an average of 2% per year. However, Korea's space industry is still at an inadequate level compared to the global market, with the satellite utilization service sector accounting for most of the sales, and growth in the space equipment manufacturing sector is almost nonexistent.

- In the case of the domestic research and development environment, it is difficult to provide support and investment for projects that require a long period of time and a large number of personnel due to various structural problems.

- Due to the performance evaluation structure based on subjective or qualitative judgment, there is a structural limitation that the government's R&D investment in the space industry cannot help but be less supportive than in other industries.

▶ The space industry refers to all activities and technologies necessary for exploring, understanding, managing, and utilizing space, from research and development to manufacturing and use of space infrastructure (ground stations, launch vehicles, and satellites). An area that includes all public and private activities related to the development, provision and use of space-related products and services (navigation equipment, satellite phones, meteorological services, etc.), including all programs related to their utilization.

○ In 2012, the OECD first established a definition of the "Space Economy" that encompasses industries and services related to space in a multidimensional manner, based on experiences in other fields including the digital economy, and the U.S. Bureau of Economic Analysis (BEA) called it the Space Economy, focusing on the impact of space activities on the future economy and society, such as products, services, and knowledge, based on this space industry.

- In addition, various new economic sectors derived from or based on space technology transfer, such as activities or product services that do not depend on space technology base or function, are being reviewed as new industries.

- In our case, there are no regulations that clearly define the space industry, but there is a "aerospace industry" In Article 2, Paragraph 1 of the "Act on Promotion of Major Industries Development," "aerospace industry" means a business that produces aircraft, spacecraft, related accessories, or related materials, and a business that produces aircraft, spacecraft, and related accessories "Application business that uses the information and communication technology as prescribed by the Ministry of Science and ICT Ordinance".

▶ According to the 2023 Space Industry Survey, the space industry is defined as “industry for space development and goods and services created through space development,” which encompasses not only the “space equipment manufacturing industry” that has the purpose of space development itself, but also all added value returned to humanity through space development.

○ The space industry is divided into six major categories: satellite production and operation, launch vehicle production and launch, space insurance, satellite utilization services and equipment, scientific research, and space exploration; and 12 subcategories: satellite production, ground stations and test facilities, launch vehicle production, launch pads and test facilities, remote sensing, satellite broadcasting and communication, satellite navigation, earth science, space and planetary science, astronomy, unmanned space exploration, and manned space exploration.

- In the case of the space industry, there is no international standard or unified classification system yet, and in Korea, the space industry is not classified as a separate independent industry in the Korean Standard Industrial Classification, but is presented integrated with other industries.

▶ The total government budget for space in each country in 2022 will be $118.6 billion, an increase of 8.1%p from the previous year. By country, the US space budget accounts for more than half of the world's government budgets, and in particular, in the case of the US, it increased by 13.6% from the previous year to $69.5 billion(58.7%).

○ In the case of our country, the government space development budget for 2023 is estimated at 874.2 billion won, a 19.1%p increase from the previous year.

- Looking at the domestic budget details, the satellite manufacturing and launch vehicle manufacturing sectors take up the largest portion, followed by ground equipment and space insurance sectors, and in the space utilization sector, satellite utilization services and equipment, scientific research, and space exploration.

- In the case of budget execution for national research and development projects, research is being conducted primarily by government-funded research institutes (hereinafter referred to as “funded research institutes”) (36.2%), and the proportion of small and medium-sized enterprises has increased slightly compared to the previous year (24.8% → 25.7%).

▶ In the case of the space industry, it has been developed and utilized as a government-led private enterprise for military and security purposes because it is difficult to create a private market environment, but space utilization services such as data transmission. At this point in time, when the commercialization of space is imminent, a system for supporting and fostering the activation of the private sector-led space industry must be established quickly.

○ The U.S. space industry, including Boeing, Lockheed Martin, ULA, and Space X, receives subsidies, use of government-owned launch pads and test sites, and technology through NASA's space development program. The role of fostering technology and generating operating profits through commercialization, etc. by receiving benefits such as technical and technical advice.

- Considering that the domestic space industry is being led by the government through national research and development projects, related policies and roadmaps that can encourage more participation by private companies, as well as improvements to the limitations of the current system, are needed.

- The space industry has been mainly invested based on demand from the government and public institutions, but recently, there has been a growing argument that private companies should take the lead in promoting industrialization in the space sector.

▶ In the case of the current “Space Development Promotion Act” and “Aerospace Industry Development Promotion Act,” there is an insufficient system for private space business operations.

○ The existence and potential value of space resources can be sufficiently acknowledged with the current level of technology, but active investment and participation from many private companies and countries are necessary to make them capable of being explored, developed, and utilized.

- In terms of private sector participation in space projects, it can be said that autonomous participation in national research and development projects is practically impossible. Until now, space projects have been conducted only as national R&D, so in order to activate space projects and transform the space industry ecosystem, it is necessary to revise existing contracts related to research and development projects.

- Government-funded research institutes are institutions that research and implement core technologies, but they are different from private companies in space projects, so it is necessary to establish a legal basis, such as defining their roles and changing the application structure under the “National Research and Development Innovation Act.”

- In the case of defense projects, a contract special system is being established and operated in consideration of such situations, and since a system suitable for the characteristics of defense projects is being established and operated, it is necessary to establish a system improvement plan suitable for the characteristics of space projects as well. It would be reasonable to say that it is appropriate for foot development.

▶ The scope of space business is defined as "① the integration of all elements such as research activities and technology development activities related to the design, production, launch, and operation of space objects, and equipment, parts, facilities, and software necessary to operate them, and ②  all elements related to the use and exploration of space and activities to promote them, etc“. Need to expand the scope.

○ Currently, a system for fostering the space industry is being established and operated through the Aerospace Industry Development Act. However, in the case of the same law, it has been operated with a focus on the aviation sector so far, and in the case of the same law, it is limited to the development of equipment and parts of related industries.

- Considering the fact that it is difficult to conduct professional inspections quickly for performance and quality tests of related products, it is necessary to establish an independent system for the space industry.

- In the case of the space industry, it should not be limited to just related devices and parts, but should also include a review of research activities and technology development activities for space development and the operating system for these, and it is urgent to establish a separate research and development system for the participation of private businesses.

- Considering that under the current system, this is being operated through national research and development procedures, there are limitations in its application to space projects.

▶ In order to activate space business development, in addition to the current national research and development project system, it is necessary to promote research and development projects for the implementation of challenging research and technology development rather than performance-oriented research and participation of the private sector from the planning stage. It is necessary to establish a system such as revision of the internal work processing guidelines of the Aerospace Administration for the purpose of special provisions that can exclude the application of the Innovation Act.

○ In 2018, the Defense Acquisition Program Administration (DAPA) revised the 'Core Technology Research and Development Work Processing Guidelines', including the basis and procedures for promoting future challenge technology development projects to implement creative and challenging defense technologies that can lead weapon systems, while promoting the Korean version of the DARPA project.

- In the case of private businesses participating in space projects, if an evaluation table for certification is prepared and a method for operating support measures for related business participants through evaluation of technology through a certification system is established, it will contribute to the fostering of related small and medium-sized enterprises.

▶ In the case of the current Space Development Promotion Act, the system is organized into a development and promotion law that is used to establish a legal basis for each sector for the development of space business, and long-term uncertainties are resolved through the enactment of the Space Business Act. Review of the enactment of a law on contracts to implement transparency and stability for the implementation of static space projects.

○ In the case of the Aerospace Industry Development Promotion Act, it only stipulates matters related to the operation of national research and development projects, such as research and development for the activation of the space industry, and considering that the details are subject to the Innovation Act and the National Contract Act, it is considered that the limited position of the space industry in the market, core competencies, and other technological developments are important It is necessary to deeply review institutional improvement plans that establish a legal basis that takes into account practical limitations such as necessity and lack of demand in the market.

- In terms of research and technology development related to space projects, the establishment of provisions for special cases in contract procedures and content is operated through a legal basis for the implementation of related policies, which enables consistent policy formulation and implementation in the operation of space projects that require a long period of time.

- From the perspective of private businesses, it is also significant in that they will make greater investments and efforts based on predictability and reliability regarding the government's will and policies in space business. In addition, long-term continuous support and policy implementation are expected to create desirable demand in exports and competition based on stability in the market and gain external credibility, which will lead to the activation of private sector space business in the future.

 

Ⅲ. Expected Effects

▶ In accordance with the government's 4th Basic Plan for the Promotion of Space Development, Korea has also established and promoted various policies and support measures to open the Space and Aerospace Administration and to activate the space industry.

○ As shown in the current 2023 space industry status, the majority of domestic space projects are still being carried out by public institutions such as government-funded research institutes, and the participation of private businesses is low.

- The aspects arising from the technical and economic limitations for promoting private space development and the economic aspects of space development.

- Considering that it may be difficult to achieve results in a short period of time or that the results may be different from expectations due to the possibility of failure, it is necessary to review the establishment of an institutional foundation to prepare improvement measures for this.

- In order to ensure active participation of private sector businesses in space projects and stable research and technology development, special provisions should be established in the National Contracts Act, or separate laws on space projects, such as the Defense Acquisition Program Act, should be considered to utilize them in establishing policies and systems to vitalize private space projects in the region.