Suk-yeol Yoon’s government finds that display as national high-tech strategic industry and looking for support system in order to enhance the competitiveness of the related industry. The industry emphasizes that there has to be expansion of tax deduction for research and development (R&D)·equipment investment in order to increase the effectiveness of private investment. Currently, the Special Tax Treatment Control Law does not include display in national strategic technology, therefore it is hard to out run Chinese display industry where they are getting full support from the government.
Presidential transition committee have presented a plan to secure super-gap in the future strategic industry as the new government’s 110 national project. They consider not only semiconductor and battery as strategic industry, but also display. It is expected that display will also be included in the national high-tech strategic industrial law (tentative name, Semiconductor Special Law). If enforcement regulation for the national high-tech strategic industrial law, there will be a full range of support for nation’s core technology, including semiconductor, display and battery.
An industry official said, "The Ministry of Industry and Trade, Industry and Energy is busy preparing enforcement regulation. It will be materialized during second half of the year."
However, as the level of tax benefits under the national high-tech strategic industry lawis not clear, there are opinions saying that through revision of the Special Tax Treatment Control Law, they have to strengthen the investment of private sector. The Special Tax Treatment Control Lawhas separate tax deductible rate according to the importance of technology including: △National Strategic Technology △New Growth·Original Technology △General. National strategic technology provides tax deductible benefit of up to 50% of R&D, and 16% (small-medium size company) of commercialize facility investment. Semiconductor and battery got included in national strategic technology within the Special Tax Treatment Control Law, but display got excluded. Display got categorized under New Growth·Original Technology.
The display industry emphasizedthat the government need to revise the Special Tax Treatment Control Lawin order to developnext-generation technologies and revitalize facility investment and make the displays a national strategic technology.
One of representative of display equipment companies said, “The display is a large-scale device industry, so it is not easy to invest only with corporate capabilities.While our investment was slow, China’s aggressive investment continued, and it became an opportunity for China to take the top spot in the display industry.”
China has been making large-scale investments in display sector led by the government. BOE is a great example. In 2018, 90% of the total investment was supported by local governments and financial institutions to build the world's largest 10.5 Gen. LCD factory facility. Out of the total construction cost of 7 trillion KRW, BOE only spent 700 billion KRW. In addition, it is reported that for five years from 2016, major display companies have been compensated for their loss of about 1 trillion KRW. As a result of such support, they surpassed sales of display products from Korea. According to market research firm Omdia, China recorded $64.8 billion in sales last year in the display sector, including LCD and organic light-emitting diode (OLED). Their market share was 41.5$, which surpassed Korea(33.2%) by far.
Dong-wook Lee, Vice chairman of the Korea Display Industry Association, said, “It is very encouraging that the Presidential transitioncommittee and the Ministry of Trade, Industry and Energy recognize the reality of the display industry and nurture it as national high-tech strategic industry law. They need to include display into national strategic technology in the Special Tax Treatment Control Lawin order to expand the tax deductibles for R&D and facility investment.”
[Facility Investment Tax CreditDeduction Rateof The Special Tax Treatment Control Law]
By Staff Reporter Dong-jun Kwon (djkwon@etnews.com)