Electronics giant signs with SMEs to finance innovative technologies
Samsung Electronics has pledged 100 billion won ($95 million) to support smaller companies’ research and development efforts.
On Monday, the electronics giant signed an agreement with the Ministry of Knowledge Economy and members of a group of small and medium-sized enterprises launching a program for providing financial support for R&D projects, and sharing the results of projects conducted under the program.
The SME group that signed the agreement was established in 2009 by Samsung Electronics but is not limited to companies that have business with the electronics firm.
Minister of Knowledge Economy Choi Joong-kyung (fifth from right, front row) and Samsung Electronics vice chairman Choi Gee-sung (fourth from right, front row) pose with representatives of SMEs after signing the R&D support agreement in Seoul on Monday. (Kim Myung-sub/The Korea Herald)
According to the agreement, Samsung Electronics will raise 100 billion won for funding SMEs research projects during August.
The fund will be operated by the Large and Small Business Cooperation Foundation.
The fund will be used to cover 70 percent of the R&D costs of selected projects, the results of which will be shared among involved parties.
Projects will be selected through an open application process, and will not be limited to those conducted by Samsung Electronics’ suppliers, unlike similar programs providing financial support to SMEs.
The fields eligible for funding include next generation telecommunications technologies, cloud computing, health care and technologies related to smart grid and renewable energy.
The ministry said the program was developed in an effort to allow SMEs that lack financial means to commercialize innovative technologies, and to increase the opportunity for such companies to work with Samsung Electronics, the Ministry of Knowledge Economy said.
In addition to allowing Samsung Electronics to take the government-led shared-growth initiative further, Monday’s agreement will bring some financial benefits for the electronics giant.
Under the revised Restriction of Special Taxation Act, 7 percent of funds added to the shared-growth program are deducted from the corporate tax levied on the company raising the fund.
With Samsung Electronics raising 100 billion won, the company’s corporate tax for 2011 will be reduced by 7 billion won.
Last year the company’s corporate tax amounted to just under 3.2 trillion won.
The tax break on such funds is in place until Dec. 31, 2013, and is limited to projects related to R&D, human resource development, increasing productivity and supporting companies to break into overseas markets.
By Choi He-suk (email@example.com