Reviving Government R&D... "Allowing Mask Purchases with Research Funds"

[Asia Economy Reporter Junho Hwang] From this month, small and medium-sized enterprises (SMEs) and mid-sized companies participating in government research and development (R&D) projects will be able to use research funds to cover cancellation fees for events canceled due to the novel coronavirus infection (COVID-19), as well as costs for purchasing hand sanitizers and health masks for infection prevention. The government will also cover labor costs for all research personnel and reduce the private contribution ratio of research funds. The government, in collaboration with related ministries, announced a 2 trillion KRW scale "Government R&D Support Measures in Response to COVID-19" on the 9th.

Government Injects 2 Trillion KRW to Revive R&D

Under this policy, all SMEs and mid-sized companies conducting R&D projects under the Ministry of Science and ICT, Ministry of Trade, Industry and Energy, and Ministry of SMEs and Startups will be eligible for various subsidies.

First, the government will support labor costs for all research personnel. The total support amount is estimated to be around 1.2 trillion KRW. Previously, labor costs were only supported for newly hired research personnel.

The private contribution ratio of research funds that companies participating in government R&D must bear will also be reduced. For SMEs, it will decrease from a maximum of 35% to 20%, and for mid-sized companies, from 50% to 35%. The cash portion will also be reduced to 10% for both SMEs and mid-sized companies. The government expects the burden on participating companies, totaling about 1 trillion KRW, to be alleviated. Among this, the cash burden is expected to reach 820 billion KRW.

The payment period for government-paid technology fees will also be extended up to two years. These fees are costs that must be paid to the national treasury, amounting to 10-40% of government support funds when sales occur from government R&D support. Each ministry plans to prepare support measures by the first half of this year.

Additionally, the government has decided to actively allow companies to change research objectives, research periods, and research plans. It will also permit flexible use of research funds, including recognizing expenses for cancellation fees of meetings and events due to COVID-19, and costs for purchasing hand sanitizers and masks for infectious disease prevention.

Support Measures by Each Ministry

Each ministry will implement support measures tailored to their characteristics.

The Ministry of Science and ICT will fully exempt the cash contribution (2.8 billion KRW) of companies participating in basic research projects (Leading Research Centers) that support joint research between regional universities and companies. The government-paid technology fees for the Materials Innovation Leading Project and technology commercialization tasks in research and development special zones (new tasks this year) will also be uniformly exempted.

The Ministry of Trade, Industry and Energy will temporarily relax financial requirements for participating companies so that companies whose financial conditions have temporarily worsened due to COVID-19 can continue R&D. The Ministry of SMEs and Startups will further reduce the private contribution for the Startup Growth Technology Development Project from the current 20% to 10%. The timing of subsidy payments for all R&D projects will also be advanced by up to three months.

Each ministry plans to revise administrative regulations and implement these measures by mid-month.

This content was produced with the assistance of AI translation services.