South Korean Government to Focus Its Future Budget on Innovative Growth of Startup Companies

Nov 02, 2017

President Moon Jae-in announced at National Assembly’s administration policy speech on the 1st that South Korean Government will reinforce ‘innovative startups’ in order to create good-quality jobs and to provide driving forces. He emphasized that South Korean Government is going to heavily use its budget for innovative growth of venture and startup companies in spite of drastic increase in budget for welfare and national defense in 2018. However some are pointing out that South Korean Government is only making a pure political spin as South Korean Government has not increased increase rate of budget for national R&D, which is the main foundation for innovative growth, even by 1%.
President Moon announced that ‘innovative growth’ is the highest priority in order to vitalize South Korean economy. “We have applied our emphasis of our budget on innovative growth in order to create good-quality jobs and new foundations for growth through Industry 4.0 and venture companies.” said President Moon with emphasis.
South Korean Government is going to invest $1.35 billion (1.5 trillion KRW) in order to create important and convergent technologies for Industry 4.0. It is going to expand its support for co-research between small and medium companies and focus on informatizing intelligence such as supporting Smart Factories. In 2018, it is going to expand its mixed financial support for investments and loans followed by additional investment of $719 million (800 billion KRW) through supplementary budget for small and medium companies support fund in 2017. It is also going to increase number of candidates qualified for its re-challenge package support. While introducing internal startup program support for the first time, it is also going to reinforce its support on private companies and South Korean government working together to create startups and social enterprises creating startups. It is going to set up 75 locations where creative ideas can lead to commercialization and startup companies. Budget for innovative growth will be used to promote small and medium companies and startup companies as expected.
President Moon showed his negative view on current economy based on conglomerates and large corporations. “Economy based on conglomerates and large corporations quickly erased poverty from South Korea and it made surprising economy development that was never seen before from any other countries after World War II possible.” said President Moon. “However it cannot guarantee South Korea’s future any more as stagnant growth and South Koreans’ fatigued lives prove to be so.”

South Korean Government to Focus Its Future Budget on Innovative Growth of Startup Companies

Small and medium companies are welcoming President Moon’s intention to focus South Korean Government’s support on innovative growth of small and medium companies. “We welcome President Moon’s intention to actively support innovative growth and to increase number of jobs.” said Korea Federation of Small and Medium Business through a press release.
“Forming stable fund for jobs with a goal of alleviating burdens for struggling small businesses while focusing national budget on innovative growth of small and medium companies and venture companies will be priming water for improving constitution of South Korean economy.” said Korea Federation of Small and Medium Business.
Some are pointing out that actual budget plan is absurdly insufficient compared to how President Moon is expressing importance on innovative growth and they are predicting that it will be difficult for South Korean Government to achieve results that they expect.
“South Korean Government only increased budget for R&D, which is the foundation for national competitive edge, by only $89.9 million (0.9%).” said Kim Kyung-jin who is a member of The People’s Party. “Percentage of budget for scientific technologies is only 4.6% compared to total expenditure of budget and it is actually lower than previous South Korean governments.” He also said that increase in budget for electronic information field, which is major technology for Industry 4.0, is only 1% and that it is a relief that it did not die out.
South Korean Government is assigning $17.3 billion (19.2 trillion KRW) of its budget for jobs which is $1.80 billion (2 trillion KRW) more than this year’s budget and is going to use them for additional employments for small social service companies in public areas. While increasing pay for education in order to increase disposable income of citizens in South Korea, which is the core for income-led growth, South Korean Government is applying current pledges such as increased support for medical bills and dementia national responsibility system on its budget. Increase rate of its budget for national defense in 2018 compared to 2017 will be the highest ever since 2009 at 6.9% and it will be used to improve defensive strength and to increase pay for soldiers.
National Assembly is going to evaluate this budget plan starting from the 2nd of this month for a month and finalize its decision at National Assembly’s general meeting before the 2nd of December, which is the deadline for court handling.
Staff Reporter Sung, Hyeonhee | sunghh@etnews.com & Staff Reporter An, Younggook | ang@etnews.com

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