Basic research has been pushed aside by the R&D budget, where will future power be found?

Ministry of Trade, Industry and Energy announces intensive support plan for high-risk, next-generation, and large-scale projects
Budgets concentrated in specific fields and basic research support projects will be abolished.
There is no innovation without basic research. A plan is needed to secure future growth engines.

The one-shot policy of government research and development (R&D) projects is spreading. The Ministry of Trade, Industry and Energy held the ‘R&D Innovation Roundtable’ at Samsung Electronics’ Seoul R&D Campus on the 18th and announced the ‘Industrial and Energy R&D Investment Strategy and Institutional Innovation Plan’ that focuses on high-risk, next-generation, and large-scale tasks. While the government budget is allocated to tasks with clear outcomes, there are concerns in the industry that government support for basic research may be insufficient in the future.

R&D budget ‘focused’ on specific fields

Through this plan, the government announced that it will completely stop R&D investment in the form of subsidies in the future and focus support on challenging R&D. First, 70% of this year’s new budget will be allocated to 40 ‘super gap projects’ in 11 major fields, and approximately 2 trillion won (government 1.3 trillion won) will be invested jointly with the public and private sectors. Approximately 120 billion won of funds will be invested in tasks to solve industrial difficulties, and the proportion of support for high-level projects with a high probability of failure will be increased to 10% within 5 years (currently 1%). In order to secure the top 10 game-changing technologies (Alchymist Season 2), we plan to conduct a preliminary feasibility study worth 1 trillion won within this year.

Technology commercialization of innovative companies is also subject to intensive support. The government plans to create a corporate venture capital (CVC) fund worth a total of 2.4 trillion won through public-private partnerships this year and establish a new national high-tech strategic industry technology innovation loan project. To support the R&D activities of small and medium-sized companies in high-tech strategic industries, ultra-low-interest loans worth a total of 390 billion won (provisional) will be provided by 2027. In order to promote R&D investment, the tax credit rate for increased general R&D investment will be temporarily increased by 10%p until December of this year.

We will also reorganize the system focusing on large-scale and long-term investment systems. The purpose is to support small-scale technological tasks to lead to final, large-scale results that have a ripple effect. To this end, the government plans to significantly increase the number of projects worth 10 billion won or more from 57 last year to 160 this year. In order to encourage the participation of excellent companies, the ratio of corporate cash burden to research expenses is reduced (up to 45%p), and the burden on companies is greatly reduced by allowing non-disclosure of projects and self-settlement.

The R&D process becomes consumer-centered. By fully introducing the item designation method, companies and researchers are encouraged to take the lead in project planning. We also plan to introduce more than 10 pilot projects using the ‘cascading’ method, which grants full authority over business operations to companies and research institutes with excellent innovation capabilities. In addition, in order to foster future talent, the number of high-tech industry specialized graduate schools will be significantly increased from the current 3 to 11, and a human resources training budget of 229.4 billion won will be invested. This is an increase of 23.2 billion won compared to the previous year.

Basic research projects put on the back burner

This year’s government’s R&D budget was reduced to 26.5 trillion won, a decrease of about 4.6 trillion won compared to the previous year. This is the result of the government adopting a ‘selection and concentration’ strategy of drastically reducing budgets in unnecessary areas and concentrating the budget on core areas. However, there are concerns in the industry that the government is focusing on immediate results and ignoring ‘basic research’. A deformed structure has been formed in which only research that is financially profitable and that can produce results in a short period of time receives government support.

This trend is clearly revealed in the decision to abolish the ‘First Life Research Project’. The First Research Project is a project that supports the first research of new basic scholars, and has played an important role in establishing young researchers in the market. In the end, this means that the government has made a ‘choice’ to dismiss a large number of young basic research personnel through this R&D cut and ‘focus’ on cutting-edge and large-scale projects. The problem is that basic research is the foundation of all R&D projects. If basic research capabilities are lacking, high-tech industrial fields such as AI are also bound to experience difficulties.

Investment in basic research is an investment for ‘tomorrow’, not today. If you continue to invest in performance-based R&D, you can secure immediate profits, but you will lose future national growth engines. The industry believes that solid basic research capabilities are essential to survive in the competition for global technological hegemony centered on the 4th industry. In order to truly achieve R&D efficiency, it is necessary to find an appropriate compromise by balancing current profits and future growth.