ICT R&D Innovation Voucher Support Project, which has $277 million (322.4 billion KRW) of investment from Ministry of Science and ICT (MSIT), is going to play an important role of supplying technologies needed by small to midsize companies at the right time.
Timing is crucial as global economies are changing rapidly and are going through a recession. South Korean Government already finished its review on preliminary feasibility test. It is up to the National Assembly to make a quick decision so that relevant budgets are invested at the right time.
◊Background to why South Korea’s small to midsize companies are in a critical situation
Reason why MSIT is trying to introduce ICT R&D Innovation Voucher Support Project is because small to midsize companies have lesser competitive edge due to economic recession and R&D system has not been efficient. MSIT is concerned that small to midsize companies will start losing their technical skills as their productivity continues to drop within global markets.
According to MSIT, productivity index, which shows production capacity of small to midsize companies, and amount of exports of small to midsize companies fell from 109.4 in January of 2018 to 83.8 in February of 2019 and $9.2 billion to $7.2 billion respectively. As they struggle to secure funds for R&D on ICT, they are also struggling to find a new breakthrough through technology innovation.
As Japanese Government’s latest regulation has also become a direct hit on small to midsize companies, it has become more important to secure technical skills in areas such as material, component, and equipment that are mostly managed by small to midsize companies.
However, South Korean Government’s current R&D projects are focused on long-term projects and its ICT R&D projects are based on a ‘top-down’ method where technologies are transferred to small to midsize companies. South Korean Government believes that its current ways are clearly limited in applying requests from companies as soon as possible and that it is difficult to compete within global markets that are changing rapidly.
As a result, MSIT’s ICT R&D Voucher Project focuses on ‘speed’. It focuses on short-term support such as one-year or two-years projects so that small to midsize companies can quickly secure necessary technologies.
◊Paradigm of R&D project lies on consumers
ICT R&D Voucher Project allows small to midsize companies to submit technologies that are in need to MSIT through a public participation and to select research institutes on their own. In case they cannot find appropriate research institute, South Korean Government finds an appropriate government-funded research institute for a company. Research fund provided by MSIT is sent to respective research institutes and not companies.
Just so that research institutes do not go through any funding issue, MSIT is going to pay 60% of research fund right after a project is selected and the rest of 40% after the corresponding project is finished. Although similar system exists in foreign countries, South Korea is the only one country that pays the most of research fund to a research institute right after a project is selected. ICT R&D Voucher Project is also going to be based on a similar system and it is going to be established as a unparalleled R&D innovation policy by MSIT.
It is expected the voucher project will also contribute to strengthening competency of research institutes in addition to small to midsize companies. Not only universities and government-funded research institutes will receive direct funding from South Korean Government, but they will also be able to communicate with companies, learn technologies that are needed by markets, and strengthen their competency at the same time.
Fact that the rate of successful commercialization of technologies developed through ICT R&D Voucher Project is 55%, which is almost double the rate of other current R&D policies, is a substantial evidence that ICT R&D Voucher Project focuses on consumers. This is another reason why the voucher project passed preliminary feasibility test by South Korean Government.
◊Everything lies on the National Assembly
MSIT is planning to support 105 projects by investing $42.0 million (48.8 billion KRW) from next year’s budget and it has requested an immediate review from the National Assembly that is currently evaluating next year’s budget. However, it is likely that MSIT’s request will not be discussed any time soon as ICT R&D Voucher Project passed preliminary feasibility test when overall budget plan by South Korean Government was submitted to the National Assembly in August.
Science, ICT, Broadcasting and Communications Committee is going to bring in the budget plan and hold a subcommittee that will evaluate the budget plan this week. Budget settlement committee will be held afterwards. Some within the National Assembly are cautious about the amount of next year’s budget being in $40 million range as there is $3.45 million (4 billion KRW) of budget formed within the current budget plan for pilot projects in 2020.
MSIT’s goal is to have actual projects be executed in 2020 by having the budget plan pass no matter what considering the urgency to provide technical support to small to midsize companies. It also expressed its plan to strengthen consulting service for small to midsize companies and research institutes and how budget is used.
“Although ICT R&D Voucher Project has secured enough grounds by passing a preliminary feasibility test, it is currently in a danger as it cannot secure minimal continuity.” said a representative for MSIT. “We ask for concerns and support so that small to midsize companies can secure technologies that they actually need.”
Staff Reporter Park, Jisung | jisung@etnews.com & Staff Reporter Jung, Yelin | yeslin@etnews.com