[Asia Economy Reporter Park Sun-mi] An analysis has emerged that expanding the tax credit for display investments could generate a trickle-down effect of 66 trillion KRW in the materials, parts, and equipment (SoBuJang) industry over the next three years.
On the 9th, the Korea Display Industry Association stated that regarding the policy to expand the facility investment tax credit rate to 15% in the display sector included in national strategic technologies, large-scale facility investment by companies and the resulting economic ripple effects can be expected. They emphasized that it is a crucial time for the government and the National Assembly to provide wholehearted support so that the Restriction of Special Taxation Act, which raises the facility investment tax credit rate, can be amended as soon as possible to create economic benefits.
The display industry plans to execute approximately 39.9 trillion KRW in facility and research and development (R&D) investments over the next three years (2023?2025). There is a high possibility that new facility investments, such as for IT OLED, will be accelerated. The development of technologies like micro OLED, which advances OLED technology, and inorganic light-emitting micro LED displays is also expected to gain momentum.
The association analyzed that, given the high domestic production rate of SoBuJang in this industry, the expansion of investments by major panel companies will generate a trickle-down effect of 66 trillion KRW in the SoBuJang industry over the next three years. Considering a 70% domestic production rate of equipment in the facility investment costs of large companies, a trickle-down effect of 21 trillion KRW will occur for domestic equipment companies. Additionally, panel companies purchase about 25 trillion KRW worth of raw materials annually, and reflecting a 60% domestic production rate of materials and parts, there will be a 45 trillion KRW purchasing effect for domestic companies.
When large companies invest, SoBuJang companies also grow together, strengthening the industrial ecosystem. The association explained that over the next three years, the display industry alone in Korea can create an economic effect of 100 trillion KRW in production inducement and over 70 trillion KRW in exports.
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