Process of selecting 250 companies in the fields of system semiconductor, bio-health, and future cars will start on the 23rd. This is a support project that will start this year for the first time by Ministry of SMEs and Startups (MSS) in order to provide personalized support for small to midsize companies that are in major fields. Just like the project that selected 100 rising companies in the fields of materials, components, and equipment last year in order to be technologically independent from Japan, the public will also participate in evaluations and select companies with high potentials.
System semiconductor field will be further divided into SoC (System on Chip), analog semiconductor, smart sensor, and infrastructure. Bio-health field and future cars field will also be further divided into pharmaceuticals, medical device, digital healthcare, and bio-related materials and two field related to autonomous driving and eco-friendly car respectively.
Company that is selected will receive a fund for commercialization or R&D that can reach up to $1.03 million (1.2 billion KRW) and a policy fund up to $11.2 million (13 billion KRW) or technical assurance.
“Because these three fields are expected to create new markets and have high potentials, we are going to spare no expense when it comes to promoting and supporting startups and venture companies with potentials for growth.” said Cha Jung-hoon who is the head of MSS’ Startup and Venture Innovation Department.
◊South Korean Government to announce 700 projects in this month alone
In addition to this project by MSS, there will be tens of other new projects that are scheduled for this year.
Just as the government announced that it would rapidly carry out its funds by the end of the first half, there are projects that have already been completed. As of the 22nd, total of 14 projects have come to a close as small to midsize companies and venture companies are flocking towards support projects that are expected to provide the most amount of funds ever in South Korea’s history. Currently, the central government and local governments are carrying out 461 and 282 projects respectively.
Small to midsize companies and venture companies are mostly interested on policy funds as $3.94 billion (4.59 trillion KRW) of policy funds are allocated for them this year compared to $789 million (920 billion KRW) last year.
Policy funds are divided into funds for venture, funds for growth, and funds for facilities. Funds for venture will provide $2.19 billion (2.55 trillion KRW) under a name “Funds for Commercialization of Innovative Ventures”, which is further divided into funds for supporting the groundwork of ventures, funds for accelerating job creation, funds for promoting future technologies, funds for promoting high growth, and funds for commercializing developed technologies. Companies that have been established less than 7 years ago or companies that have been established between 3 and 10 years are subjected to funds for venture.
Funds for growth will be divided into funds for the groundwork of new growth ($1.14 billion (1.33 trillion KRW)), funds for supporting small companies and venture companies enter new markets ($172 million (200 billion KRW)), and loans and investments combines finance ($172 million (200 billion KRW)). Policy funds worth $266 million (310 billion KRW) will also be invested for companies that are looking to rebound. Companies that are looking to adopt smart manufacturing or install automated facilities to make ICT-based production more effective can also receive funds for smart manufacturing out of funds for the groundwork of new growth.
Any company can apply for policy funds at all times throughout the year. Because South Korean Government has set enough funds this year as well, a chance of the project ending early is not high. “Although demands for policy funds are usually high during the first quarter of a year when companies need funds, we will not have to worry about our budget getting drained.” said a representative for Korea SMEs and Startups Agency. “Because there will be enough funds until the second half, it is desirable for a company to establish a plan on how it is going to manage funds and apply for policy funds when it feels like it needs funds the most.”
◊South Korean Government drastically increases financial support for R&D
South Korean Government has also drastically increased this year’s financial support for small to midsize companies on R&D. It is going to invest $1.28 billion (1.4885 trillion KRW) that is 38.5% increase compared to last year’s amount. There are also 18 R&D projects that are newly established in this year alone and they are worth $241 million (280.7 billion KRW).
Unlike policy funds, candidates are selected separately based on a project for R&D funds. Out of 50 R&D projects, more than half of them are already announced publicly, and applications for them are scheduled to be received starting from next month.
Biggest project is a project that will help small to midsize companies with development of commercialized technologies. New $104 million (121.6 billion KRW) budget is allocated for this year. Total of 1,120 companies received financial support from the government last year. Development of new products with an option to purchase will receive up to $429 million (500 million KRW) for two years. The government contributes to about 65%.
The government will also provide $172 million (200 billion KRW) and $102 million (118.6 billion KRW) for companies that are trying to create new industries for the Fourth Industrial Revolution and companies that are looking to be independent in the fields of materials, components, and equipment respectively and start receiving applications for financial support sometime during next month.
Companies that lose opportunity to apply this time will have another opportunity in the second half. Most of projects will be carried out sometime in February, and other remaining projects will be announced publicly again in May and June.
◊Various support projects also provided by other departments
Besides MSS, other departments will also carry out various projects. First, Ministry of Employment Labor’s (MOEL) project that will provide incentives for hiring additional young men and women draws huge interests from small to midsize companies and medium-size companies. When a company hires a young man or a woman as a full-time employee or increases number of employees in order to create jobs with good quality, it will receive incentives from the government. Any company that has hired at least five young men and women as full-time employees can apply for these incentives. This requirement does not apply for venture companies or types of companies with potential for growth.
Per employee, the government will provide up to $7,700 (9 million KRW) annually for three years. This incentive is applicable up to 30 people per company. MOEL is planning to provide new incentives for 90,000 people this year.
Asset Building Program for Youth Employee is also popular amongst small to midsize companies. In order to induce young men and women from working for small to midsize companies and medium-size companies for long time, mutual aid fund is set up jointly by young men and women, companies, and the government and is given to young men and women who have two to three years of continuous service as a performance compensation. People with two years of continuous service will receive $13,700 (16 million KRW) while people with three years of continuous service will receive $25,700 (30 million KRW).
Ministry of Trade, Industry and Energy (MOTIE) will recruit companies that will participate in its project that will support companies that independently participate in foreign exhibitions until the 31st. Its project will provide up to $4,300 (5 million KRW) per exhibition. It is planning to support about 1,800 companies with costs of participating in foreign exhibitions and costs of transporting exhibits.
MOTIE will also carry out a project that will support small to midsize companies with entering foreign markets through consulting on exportation and making of catalogs in foreign languages. It is going to have one mentor/consultant per company and help 700 small to midsize companies and 300 companies that are novice in exportation with trade business, export contract, and finding of foreign customers along with related organizations and Korea Trade-Investment Promotion Agency (KOTRA).
Defense Acquisition Program Administration (DAPA) is using policy funds allocated for small to midsize companies in the national defense field in order to finance funds with low interest for small to midsize companies that are not assigned as companies in the defense industry and it is helping with difference in interest of the open market rate. It is going to carry out first recruitment until the 31st and its main target is companies that need funds to produce military supplies. About $42.9 million (50 billion KRW) will be used for small to midsize companies that are working on R&D and installation of facilities.
Besides these projects, there are also other projects provided by other departments such as Ministry of Science and ICT, Public Procurement Service, Ministry of Environment, Ministry of Oceans and Fisheries, and Korean Intellectual Property Office.
“Although most of support projects are usually made available during the first half of a year, we are also planning to publicly announce support projects in the second half for companies that miss the timing of application.” said a representative for MSS. “It is necessary for companies to be interested in other support projects provided by various departments in addition to our department.”
Staff Reporter Ryu, Geunil |