Korea Bio Association "Bio Technology Tax Credit Should Be Expanded"

[Asia Economy Reporter Myunghwan Lee] The Korea Bio Association has demanded that "measures to expand support for bio technology should be discussed promptly" in response to the government's plan to strengthen tax incentives to activate investment in national strategic technologies.

This follows the passage of a plan to strengthen tax incentives at the Cabinet meeting on the 3rd of last month, which includes expanding the tax credit rate for facility investments in national strategic technologies and temporarily increasing the tax credit rate for new growth source technologies for one year.

In a statement released on the 9th, the association argued, "To secure investment incentives for our companies and global competitiveness in bio technology, which has significant health security and economic ripple effects, the National Assembly should promptly discuss and reflect expanded tax support measures."

According to the association, countries around the world, including the United States, are expected to end the public health emergency caused by COVID-19 and implement policies aligned with the endemic phase (periodic outbreaks of infectious diseases). In this case, vaccines and treatments that were purchased and provided free of charge by the government will be left to the market, with supply and prices formed at the private level, the association forecasted.

The association warned, "In urgent situations such as the emergence of new COVID-19 variants with high infection or fatality rates, governments or companies with strong bargaining power may lead vaccine purchases, causing health security imbalances where lower-priority areas experience delayed supply."

There was also a call to induce active investment by domestic companies to increase the self-sufficiency rate of vaccines and innovative new drugs. According to the association, South Korea's vaccine trade deficit reached $800 million last year. Vaccines for various infectious diseases and illnesses, including COVID-19, are mostly dependent on imports. As of 2021, only 11 out of 28 types of vaccines used for immunization can be produced domestically. Innovative pharmaceuticals targeting various diseases such as cancer and rare diseases are expensive and mostly approved and imported from advanced countries like the United States and Europe. The association stated, "With South Korea's vaccine self-sufficiency rate at only 39.3%, it is necessary to induce active research and development (R&D) and facility investment by domestic companies."

Additionally, the association pointed out that private investment sentiment is significantly shrinking, citing that new venture capital (VC) investment in the domestic bio sector plummeted by 34.1% year-on-year last year due to global economic slowdown and interest rate hikes. The association emphasized, "Given the bio industry's characteristics, which require long-term investment to verify the safety and efficacy of pharmaceuticals, government tax support must be strengthened to actively attract private investment."