Government R&D, Cash to Tax Support... Improving the 'Sharing' Practice

Jeong Manki, Vice Chairman of Muhyeop... "Productivity Down Due to Research Fund Sharing"
"Expand Tax Support Instead of Cash... Break Bureaucracy"

Jung Manki, Vice Chairman of the Korea International Trade Association (KITA) and Chairman of the Korea Industrial Alliance Forum (KIAF), argued on the 6th that government research and development (R&D) subsidies should shift from cash support to tax incentives to increase productivity. This comes as President Yoon Suk-yeol has ordered a comprehensive review of the national R&D budget of 31 trillion won, pledging to improve the practice of subsidy sharing.

KIAF announced that it will hold the 39th Industrial Development Forum on the 6th under the theme of "Industrial and Economic Response Directions for the Second Half of the Year." Vice Chairman Jung said, "The government projected an economic growth rate of 0.9% for the first half of the year, 1.8% for the second half, and 2.4% for next year," adding, "This indicates that our economy is recovering from its lowest point." He also stated, "Although signs of recovery are appearing, such as a slowdown in the decline of exports, this is due more to global economic fluctuations than improvements in Korea's competitiveness or export industries," emphasizing, "Efforts must be made to fundamentally strengthen the industrial structure and competitiveness."

Vice Chairman Jung stressed the need to change the government’s R&D support methods to enhance productivity. He said, "Government R&D projects suffer from low productivity due to the practice of dividing research funds and bureaucratic processes in the selection of projects and operators," adding, "It is necessary to complement the cash support system by expanding tax incentive methods and to innovate by breaking the bureaucracy embedded in the cash support system."

Stakeholders in key export industries such as semiconductors voiced common difficulties in management. Joo Won, Head of Economic Research at Hyundai Research Institute, said, "Exports are expected to increase in the second half of this year due to the base effect from the second half of last year, but it seems difficult to expect a high level of recovery due to the stagnation of the Chinese market and delayed recovery in the semiconductor market." Joo added, "Companies need to revise their business strategies from a conservative perspective," emphasizing, "They should focus on securing cash, managing short- and long-term debt, seizing new business opportunities, and acquiring talented personnel to enhance growth potential."

Representatives from industry groups in semiconductors, displays, petrochemicals, textiles, automotive mobility, home appliances, shipbuilding, steel, and aerospace demanded more proactive government support. They requested measures including ▲prevention of foreign exchange losses (machinery) ▲support for next-generation technology development (display) ▲support for electricity and water supply (semiconductors) ▲trade response to major countries such as the U.S. (batteries) ▲support for carbon-neutral technology development (petrochemicals) ▲establishment of flexible labor-management relations and labor flexibility guarantees (automotive) ▲expansion of high-efficiency home appliance purchase support programs (home appliances) ▲establishment of a space and aerospace agency (aerospace).

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