[Exclusive] They trusted the government and signed agreements—but regional firms face a 37.7 billion won research-funding gap

[Financial News] The government has allocated 37.7 billion won less than originally required for next year’s budget for research and development (R&D) projects already agreed with regional small and medium-sized enterprises (SMEs) and others, it has been confirmed. Companies that launched R&D projects relying on government support now face having to cut research funding midway through their projects. The Ministry of Trade, Industry and Energy plans to reduce and revise funding and project plans under existing agreements, raising concerns that technology development and hiring at regional firms will be disrupted.
On the 12th, a National Assembly review report on the 2027 budget proposal under the Ministry of Trade, Industry and Energy said that the amount required next year for the Regional Innovation Cluster Development (R&D) project is 103.034 billion won. However, the government allocated just 65.3 billion won. That is 37.734 billion won (36.6%) less than required.
The problem is that companies already under agreement and conducting research will be affected. A total of 156 research projects are due to continue next year. Of these, 120 (76.9%) were newly contracted this year, meaning next year will be only their second year. In particular, SMEs lead 92 (76.7%) of the 120 new projects, making it likely that the burden of funding cuts will fall disproportionately on regional SMEs.
The ministry plans to reduce and revise the R&D funding and implementation plans for each project with companies and institutions already under agreement, in line with next year’s budget. From the companies’ perspective, this means revising mid-project the business plans they drew up based on the research funding agreed with the government.
The burden could be even greater for companies that have hired research staff or brought in equipment and facilities. As of this year, 40 projects are being carried out on the condition that a company or institution move into a regional innovation cluster. It has been noted that funding cuts could also disrupt relocation plans already underway.
The National Assembly review report noted that “companies could bear a financial burden as funding under existing agreements is reduced” and that this “could lead to research being halted, cluster-entry or relocation plans being withdrawn, SMEs halting technology development, and cuts in employment.”
The southeastern region had the largest research-funding shortfall, at 7.094 billion won. The shortfall was 4.97 billion won in the southwestern region, 3.272 billion won in the Daegu-Gyeongbuk region, and 3.004 billion won in North Jeolla Province. The shortfall as a share of the amount required reached 42.9% in the southwestern region and 41.8% in North Jeolla Province.
[email protected] Kim Gyeong-min Reporter