1.2 Trillion Invested in SoBuJang Technology Development... New Contract Departments Established with Samsung, Hyundai, and KT

The 3rd SoBuJang Competitiveness Committee Meeting Held... 2020 Implementation Plan Announced
70% of 2.1 Trillion KRW Budget to be Executed in First Half... Incentives for Outstanding Talent
Financial Support Including 1 Trillion KRW Guarantee for SMEs... Operation of SoBuJang Investment Fund

[Image source=Yonhap News]

[Asia Economy Reporters Kim Bo-kyung and Moon Chae-seok] The government will invest 1.2 trillion KRW in the development of technologies for 100 core items to strengthen the competitiveness of the materials, parts, and equipment (SoBuJang) industry this year. It plans to establish SoBuJang departments at universities to facilitate retraining of employees from partner companies and provide wage support to companies that hire SoBuJang research and specialized personnel.

On the 22nd, the Ministry of Trade, Industry and Energy announced the 2020 SoBuJang countermeasure implementation plan at the '3rd SoBuJang Competitiveness Committee' chaired by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki.

The government plans to execute 70% of the 2.1 trillion KRW SoBuJang budget in the first half of this year. First, it will invest 1.2 trillion KRW in technology development for 100 core items to achieve early supply stabilization. In particular, for the three major items subject to Japan's export restrictions, the government will support corporate activities such as expanding domestic production to achieve complete supply stabilization.

For the 20 items targeted to achieve supply stabilization within one year, focused support will be provided for reliability assurance (20 billion KRW), mass production evaluation (40 billion KRW), and import diversification will be pursued simultaneously. The remaining 80 items will receive 1.1311 trillion KRW for technology development, aiming to achieve supply stabilization by 2025. Customized support will be provided by selecting 100 specialized SoBuJang leading companies with technology and supply capabilities tailored to the 100 core items, as well as innovative startups and strong small and medium enterprises (SMEs).

This year, 'SoBuJang Win-Win Contract Departments' will be newly established at three universities to strengthen workforce development. Large corporations will identify the educational needs of employees at partner (small and medium) companies and jointly develop curricula with universities. Kyung Hee University and Samsung Electronics will collaborate in the materials and parts field, Suwon University and Hyundai Motor Company in the hydrogen vehicle sector, and Daegu University and KT in the connected car field. Each department will have a capacity of about 15 to 20 students.

Incentives for attracting excellent talent have also been prepared. The government plans to support up to 50% of wages for up to three years when companies hire SoBuJang-related research personnel, and up to 50% of wages for up to six years when specialized personnel from public research institutions are dispatched to companies. For 10 SoBuJang occupations including electronics, chemistry, and telecommunications engineering, overseas experts (E-7 visa holders) will be eligible for fast-track procedures such as electronic visas when seeking employment in Korea, and income tax deductions of up to 70% for five years will be provided.

Additionally, the government plans to expand support such as guarantees worth about 1 trillion KRW for SoBuJang SMEs and policy funds for business stabilization. To support companies, SoBuJang investment funds totaling 1 trillion KRW will be actively established and operated, including 100 billion KRW from the Ministry of Trade, Industry and Energy, 100 billion KRW from the Ministry of SMEs and Startups, and 400 billion KRW from the Financial Services Commission.

Meanwhile, the Competitiveness Committee approved six cooperation projects between demand and supply companies on the same day. These include three projects discovered by the working-level task force to stabilize supply chains and secure competitiveness of core items, and three projects proposed by the Win-Win Council focusing on strengthening SME capabilities. The government plans to discover more than 20 cooperation projects this year.

Deputy Prime Minister Hong said, "Japan's inappropriate unilateral export restrictions cause damage not only to both Korea and Japan but also severely deteriorate the global value chain," urging advanced measures for restoration. He added, "We will complete the firm supply stabilization work for the three core items," and "We will mobilize all available means to gradually complete supply stabilization for all 100 items by 2025."