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Korea to step up R&D support for small firms

Competitive parts suppliers to receive funding for up to three years


South Korea is poised to offer funding for research and development at a total of 50 prospective small-sized local parts and materials makers in order to bolster the nation’s industrial competitiveness, the Ministry of Knowledge Economy said Thursday.

The ministry will provide selected firms that are posting average annual sales of less than 10 billion won with annual funds of 100-300 million won ($278,000) for two to three years, officials said.

The ministry is ultimately planning to increase the number of fund recipients to 2,000 by 2020.

The government’s latest move comes in the face of the strong demand for R&D funding in the local parts and materials industry which has had to weather significant challenges in order to receive such assistance, the ministry said.

“Small- and medium-sized firms have been playing a key role in boosting the nation’s competence in its manufacturing industry,” a ministry official said. “We are planning to assist them to expand their capacity by giving them chances for higher-level researchers.”

Korea’s research and development efforts have so far mostly been focused on nurturing growth driver technologies such as green cars and intelligent robots.

Of the R&D budget allocation of 4.5 trillion won this year, Seoul decided to spend 380 billion won on growth engines based on technical convergence such as robotics, medicine and clean cars.

Investment in parts and materials, on the other hand, was just 100 billion won, though another 90 billion won was allocated for nurturing small- and medium-sized firms, which are mostly involved in such business.

Another factor which made it tougher for smaller-sized firms to be eligible for governmental assistance was their lack of R&D experience and high-quality workforce, as well as their ability to meet tough requirements, such as complicated paperwork, according to the ministry.

“Yet despite their lack of experience, we found that many local parts and materials firms have the technology and operational skills to carry out independent research projects,” the ministry said.

The government stressed the significance of parts and materials, saying that they can largely influence the cost and added value for complete products and their quality.

Seoul is also hoping that the boosted financial support for smaller firms will create more jobs, as those at such businesses currently account for 29 percent of the total.

The country’s parts and materials industry has grown largely over the past decade, with the trade surplus from the sector standing at 78 billion won as of 2010. The figure was merely 2.7 billion won in 2001.

This was thanks to a special act the government launched in 2001 to help the sector which lagged behind that of Japan at the time.

Yet experts have been calling for the need of additional long-term, large-scale support measures, as research in the field takes a long time and money to register success.

On top of the latest financial support, the government decided to extend the act, which expires at the end of this year, for another 10 years last month.

By Koh Young-aah (youngaah@heraldcorp.com)
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