Next Year Introduction of 'R&D Sandbox'... Blanket Exemption of R&D Regulations for Outstanding Companies

Ministry of Industry Announces 'Industrial R&D Innovation Plan'
Up to 75% Reduction in Cash Burden for R&D of Large, Mid-sized, and Small Enterprises
Promoting Integrated R&D Cooperation Among Upstream and Downstream Companies in the Value Chain

[Asia Economy Reporter Moon Chaeseok] The government announced plans to introduce an 'R&D Sandbox' that will grant blanket exemptions from research and development (R&D) regulations for outstanding companies.

On the 8th, Sung Yoon-mo, Minister of Trade, Industry and Energy, held a non-face-to-face online meeting with experts from industry, academia, and research institutes to announce the 'Market-Centered Autonomous and Open Industrial R&D Innovation Plan.'

Although the government’s R&D budget has grown to 3.4 trillion won last year, 4.2 trillion won this year, and 4.9 trillion won (government proposal) next year, suggestions to improve the system to enhance economic outcomes such as commercialization were accepted.

The three main strategies of the industrial R&D innovation plan are ▲strengthening autonomy and responsibility in research ▲market- and performance-oriented R&D systems ▲and reinforcing open innovation.

Contents of the 'Research and Development (R&D) Sandbox' system to be introduced by the government. (Source: Ministry of Trade, Industry and Energy)

To this end, various policy tasks will be pursued, including the introduction of the R&D Sandbox, easing corporate matching burdens, and large-scale integrated R&D.

First, the 'R&D Sandbox' will be introduced to grant blanket exemptions from R&D regulations for outstanding companies. Companies applying the R&D Sandbox track will have significantly enhanced autonomy in research fund execution and settlement, changes in research goals, and consortium modifications.

Despite changes in market conditions, restrictions on changing research goals and budget items (materials, labor, equipment) made it difficult to alter original research plans; this industrial environment will be improved.

To promote cooperation among large, medium, and small enterprises, the R&D cash contribution will be reduced to up to one-quarter of the current level.

Source: Ministry of Trade, Industry and Energy

The evaluation system will be changed from the existing method that classifies results as success (innovation performance, normal) and failure (faithful performance, unfaithful performance) to a three-tier system based on research quality (excellent, completed, unfaithful performance).

Large-scale integrated R&D involving cooperation between upstream and downstream companies in the industrial value chain will be introduced.

Large-scale integrated R&D projects will be promoted to account for more than 20% of new tasks, involving related industry-academia-research collaborations including downstream small and medium enterprises and upstream large and medium enterprises.

To increase participation, the matching burden on large and medium enterprises will be significantly reduced to about half of the current level. The lead institution will be granted autonomy over goal changes and budget modifications.

To achieve commercialization outcomes, corporate R&D will be planned and managed focusing on market demand and commercialization capabilities. Tasks led by public research institutes, universities, and companies will be clearly distinguished according to the type of technology development.

At the final evaluation, additional R&D for demonstration and commercialization will be supported for excellent research projects within two years.

Additionally, ▲introduction of a data-based research and planning management system ▲establishment of a 'Service R&D Exception' to promote manufacturing-service convergence R&D ▲creation of a 'Technology Innovation Specialized Fund' worth 500 billion won over the next three years (160 billion won this year) will be implemented.

To assist small and medium enterprises and medium-sized companies in entering the global value chain (GVC), 'Global Demand-Linked R&D' will be promoted.

For this, a new 'Global X&D (Technology Acquisition and Development)' project will be launched. This project will establish global technology development linked with overseas demand companies and support additional development based on technologies acquired through overseas technology imports or mergers and acquisitions (M&A).

Source: Ministry of Trade, Industry and Energy

Other initiatives include ▲establishing the Korea-ASEAN Industrial Innovation Organization by the end of next year ▲expanding the proportion of international cooperation R&D projects within industrial R&D from the current 2-3% to 15% by 2023 ▲and preparing 'International Cooperation R&D Exceptions' to improve project fund settlement and intellectual property regulations.

Minister Sung said, "Our industry is currently in an unprecedented era of uncertainty due to COVID-19 and digital transformation, and the technological innovation capabilities of companies responding to these changes and uncertainties are crucial. We will actively strive to effectively support industrial R&D so that companies can overcome crises and strengthen their innovation capabilities."

Source: Ministry of Trade, Industry and Energy

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