Korea pushes for tech funding scheme revisions to lower fees

2024.04.03 08:52:01 | 2024.04.03 11:18:28

[Graphics by Song Ji-yoon]이미지 확대

[Graphics by Song Ji-yoon]

The South Korean government is pushing for measures to lower the fees that companies must pay when developing new technologies with government funding, which it hopes will also stimulate research and development (R&D) activities among businesses.

According to government and industry sources on Tuesday, the government is considering a reduction of the “technology fees” paid by companies to 60 percent of the current level.

The government collects these fees from companies as part of a program via which it funds companies‘ R&D efforts but requires them to repay a portion of the support they receive in the form of fees. Fees are collected only for successful projects while not collected for failed projects and are calculated by multiplying the new technology’s contribution based on the relevant R&D results by each company’s payment rate. Companies currently pay over 100 billion won ($74 million) in these fees to the government annually.

The proposed change includes lowering the payment rate by company size. Currently set at 5 percent for small and medium-sized enterprises (SMEs), 10 percent for middle-market companies, and 20 percent for large conglomerates, the government is considering reducing these rates to 3 percent for SMEs, 6 percent for middle-market companies, and 12 percent for conglomerates. A small-sized biomaterial company developing bone graft implants with government support and earning 500 million won in revenue, for example, may see its technology fees decrease to 12 million won after the revision from the current 20 million won.

[Graphics by Song Ji-yoon and Chang Iou-chung]이미지 확대

[Graphics by Song Ji-yoon and Chang Iou-chung]

But the draft revision reportedly does not alter the fees’ upper limit, which is currently set at 10 percent of the government support for SMEs, 20 percent for middle-market companies, and 40 percent for conglomerates. The government believes that changing both the payment rate and the fee limit could cause confusion.

The revision is likely to be announced in May 2024 after detailed discussions among the relevant ministries, including the Ministry of Economy and Finance, the Ministry of Science and ICT, the Ministry of Trade, Industry and Energy, and the Ministry of SMEs and Startups.

The proposed payment rate changes only require an amendment to the enforcement decree of the law governing national R&D. Once finalized, these changes are expected to be reflected in the 2025 budget plan.

The government is comprehensively devising R&D activation measures that include technology fee adjustments. President Yoon Suk Yul has recently emphasized a significant increase in R&D investment in 2025, particularly in the artificial intelligence (AI), advanced bio, and quantum sectors.

By Lee Hee-jo and Chang Iou-chung

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