[Heart of Innovation, Corporate Research Institutes ⑥] "Talent Development Must Be at Disaster-Response Level... Rebuilding 'Technology Powerhouses' Is Essential"

Interview with Koo Ja-kyun, Chairman of KOITA and LS Electric
"Establish an Innovation Talent Headquarters
to Restructure Fragmented Talent Development Strategies Across Ministries"
"Urgent Need for Tax Support for Companies Expanding R&D"
"Re

Editor's NoteThere is a growing call for a new driving force to revive the Korean economy, whose growth engine is fading. Where are the corporate research institutes, once the heart of our economy, headed now? Asia Economy explores solutions in a four-part series. We will examine the conditions for a great research institute through the case of IBM, which revived after its "lost decade," and revisit the spirit of the founders who championed "technology for the nation" to propose policies for a Korean-style R&D 2.0 era. We hope this series will serve as an opportunity to find a new path for our economy to move forward once again.

At a time when concerns are being raised about the loss of momentum in Korea’s technology and businesses, Asia Economy interviewed Koo Ja-kyun, Chairman of the Korea Industrial Technology Promotion Association (KITA), to hear his views on the future direction of Korean corporate research institutes. Chairman Koo is the head of KITA, representing over 50,000 corporate research institutes, and is also the CEO of LS Electric, which leads technological innovation by investing more than 5% of its annual sales in research and development (R&D). As a business leader, he drives corporate R&D on the ground, and as the association chairman, he is deeply engaged in the present and future of Korean corporate research institutes. What is the future he envisions for these institutes?

Koo Ja-kyun, chairman of the Korea Industrial Technology Promotion Association, poses in front of a globe during an interview with Asia Economy. LS Electric

Q. While there are many long-standing companies in Korea, few research institutes supporting them come to mind. What are the conditions for creating a "long-standing and innovative research institute" like the IBM Watson Research Center?

A. Experts cite "flexibility to adapt to environmental changes" as a key requirement for long-standing companies. Ultimately, the strength of this flexibility comes from technological innovation capabilities. To achieve this, decisive leadership and a long-term vision from corporate leaders are essential. There must be leadership that does not become fixated on short-term results and continues R&D investment even amid uncertainty.

Jensen Huang, CEO of NVIDIA, is a prime example. Even when facing bankruptcy, he boldly invested in graphics processing units (GPUs), seeing them not just as gaming components but as core infrastructure for future industries, placing the company at the center of today’s artificial intelligence (AI) innovation. Similarly, companies must strengthen the status and role of technology leaders so that their decisions are directly linked to business strategies. At the same time, the government should provide bold tax incentives to companies that continue long-term R&D investment, creating an environment where businesses can confidently invest in research and development over the long term.

Q. How should corporate research institutes change in the AI era? What is the government's role in this era of AI transformation?

A. AI is a game changer that fundamentally transforms the way research and development is conducted. For example, the process of discovering new drug candidates, which used to take decades, has been shortened to just a few months thanks to AI. In this context, corporate research institutes should move in three directions: first, strengthening data-driven research capabilities; second, promoting convergence research across industries and academic disciplines; and third, expanding open collaboration. This is because AI technology and data have clear limitations when pursued by a single company alone.

The government’s role is even more critical. If each ministry continues to create its own AI policies and execute separate budgets, Korea will not be able to keep pace with the global speed race. To win the AI competition that will determine the nation’s fate, a strong control tower that spans all ministries is essential.

In this regard, there are high expectations for the revival of the "Deputy Prime Minister for Science and Technology" system after 17 years. In the past, this system successfully prevented duplication in national R&D policies, improved efficiency, and served as a focal point for the science and technology community. Now, the reinstated Deputy Prime Minister for Science and Technology must work closely with the Presidential National AI Strategy Committee, break down silos between ministries, and comprehensively coordinate national AI strategies and R&D budgets. When the voices from the industrial field are properly reflected in national policy, Korea will be able to emerge as a true AI powerhouse.

Q. In the AI era, companies around the world are responding with massive investments. We are now seeing amounts that were unimaginable in the past. What would you like the government to do to increase R&D investment by Korean companies?

A. The biggest challenges companies face are the "burden of operating costs such as R&D personnel expenses" and the "lack of capacity for long-term investment." In this situation, the most effective way to increase corporate investment is undoubtedly tax support. Tax incentives reduce the risks companies face when investing in R&D and have a positive effect by encouraging bold investments in challenging areas.

This year, KITA proposed to the government the following: an "R&D tax credit refund system," which allows tax credits to be refunded in cash; an "R&D tax credit trading system," which allows companies to sell their tax reduction rights to other firms; and an "R&D investment increment incentive," which provides bonus benefits to companies that increase their R&D investment, even by a small amount. If these systems are introduced, corporate cash flow will improve, and more investment will be encouraged.

Q. How would you assess the current state of corporate research in Korea? What are the shortcomings and areas for improvement?

A. Korea’s research and development capabilities are at a globally high level. As of 2023, the country’s total R&D expenditure was about 119 trillion won, ranking fifth in the world, with companies accounting for 79% of this amount and serving as the backbone of national technological competitiveness. However, due to economic downturns and supply chain shocks, difficulties in the corporate sector are increasing, and R&D is also being scaled back.

The most regrettable and urgent issue is securing talent. While low birth rates and an aging population are causing a severe workforce shortage across industries, the lack of corporate R&D personnel, which is directly linked to national technological strength, is even more critical. Recognizing that "securing talent is disaster response," we must mobilize national efforts. To this end, a new "Innovation Talent Headquarters" (tentative name) should be established to integrate and manage personnel support programs scattered across different ministries, and a comprehensive roadmap should be developed to systematically nurture the talent needed by industry.

Koo Ja-kyun, Chairman of the Korea Industrial Technology Association, is being interviewed by Asia Economy. LS Electric.

Q. People are indeed the key. What measures can be taken to boost the morale of corporate researchers?

A. Ultimately, the future of Korea depends on corporate researchers. From my experience, what matters more to researchers than simple rewards is pride and respect. When researchers are assured that "my research contributes to national development," they are more passionate and dedicated to their work.

In the United States, outstanding researchers are awarded medals for technological innovation, and in the United Kingdom, Alan Turing (the British mathematical genius and cryptographer known as the "father of computer science and AI") is commemorated on currency. Korea should also expand rewards for researchers and elevate their social status. In this regard, I believe it is highly meaningful that the "Corporate Research Institute Act," which will take effect in February next year, designates "Technology Developer’s Day" as a national commemorative day, as this will greatly enhance the pride of private-sector researchers.

◆ Who is Koo Ja-kyun, Chairman of LS Electric and the Korea Industrial Technology Promotion Association (KITA)? = Chairman Koo graduated from the Department of Law at Korea University and earned a Ph.D. in Business Administration from the University of Texas in the United States. Since 1993, he has served as a professor of business administration at Kookmin University and the Graduate School of International Studies at Korea University. In 2005, he transitioned to management by joining LS Industrial Systems (now LS Electric) as Executive Vice President of the Management Division. After becoming Chairman of LS Electric in 2014, he transformed the company, a manufacturer of power equipment, into a smart energy solutions provider. With a strong belief in R&D, he has consistently invested more than 5% of sales in R&D, leading digital transformation and the development of eco-friendly technologies. Since 2019, as Chairman of KITA, representing over 50,000 corporate research institutes, he has spearheaded policy proposals and support for revitalizing corporate R&D, emerging as a leader driving technological advancement across Korea’s industrial sector.

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