Five Leading Defense Companies to Provide 642.7 Billion Won for SMEs and Startups... Office of the President Reviews Mutual Growth Strategy

Review Meeting Led by Senior Secretary Ha Jun-kyung

Sharing This Year's Partnership Plans and Best Practices in the Defense Industry

The Lee Jaemyung administration is accelerating the creation of a cooperative ecosystem in which large defense companies, their partner small and medium-sized enterprises (SMEs), and startups grow together. The top five major defense companies have decided to implement a cooperative growth plan worth a total of 642.7 billion won this year to support SMEs and startups.

According to the Office of the President on March 18, Ha Jun-kyung, Senior Secretary for Economic Growth, held a review meeting on cooperative growth strategies in the defense industry sector. At the meeting, he examined the cooperative plans and best practices of major defense companies. The meeting was attended by the Ministry of SMEs and Startups, the Defense Acquisition Program Administration, and the top five defense companies.

This meeting was a follow-up to the government's "Cooperative Growth Strategy for Large and Small Businesses" announced in January. The government is expanding its existing co-prosperity policies, which had focused on traditional manufacturing, to include defense, platforms, and financial sectors. It has also set a direction to broaden the concept of co-prosperity, introduced in 2010, to "cooperative growth" for the first time in 16 years.

Cooperative efforts in the defense sector have been in full swing since last month. In February, the Ministry of SMEs and Startups and the Defense Acquisition Program Administration signed memoranda of understanding (MOUs) with six organizations: the Korea Startup Promotion Agency, the Korea Technology and Information Promotion Agency for SMEs, the Korea Commission for Corporate Partnership, the Agency for Defense Development, the Defense Agency for Technology and Quality, and the Defense Technology Promotion Research Institute. They jointly announced a comprehensive plan to nurture defense startups. The purpose is to shift the existing large company-centered defense policy to a cooperative ecosystem that includes participation from startups.

The Office of the President has been intensively reviewing cooperative efforts in the defense sector, following the "Dialogue with Entrepreneurs Practicing Coexistence" presided over by the President on March 10 and the meeting held today.

This year, the 642.7 billion won allocated for cooperative programs by the top five defense companies will be used for joint research and development (R&D), financial support, overseas expansion, welfare enhancement, and contributions to cooperative growth funds. Breaking it down, 145 billion won will be allocated to joint R&D for localization of defense components, and 481.4 billion won will be set aside for financial support to stabilize the management of SMEs and enhance their independent capabilities. Additionally, 3.2 billion won will be invested in supporting the overseas expansion of partner companies, and 3.6 billion won in welfare enhancement. Another 9.5 billion won will be contributed to cooperative growth funds.

Each company's plan has also been specified. Hanwha Aerospace will pursue joint R&D with partners and provide support for R&D and facility expenses to enhance localization and performance improvement in five advanced defense fields, including aerospace and robotics. Hyundai Rotem will increase its co-prosperity fund for revitalizing new investments by partners from 70 billion won last year to 150 billion won this year. It also plans to invest 200 billion won in R&D over two years to boost research achievements by its partners.

LIG Nex1 will establish an independent corporation in the United Arab Emirates (UAE) in April to support the overseas expansion of partner companies and startups. It will also help domestic partners establish local living conditions and production facilities. Hanwha Systems plans to invest a total of 408 billion won in ten core R&D areas targeting SMEs and startups from 2026 to 2030 to expand investments in core defense technologies.

Korea Aerospace Industries (KAI) will provide a total of 128 billion won in support, including 90 billion won for stabilizing partner management, 32 billion won for enhancing competitiveness, and 5.7 billion won for expanding employment. In particular, it will strengthen financial support by providing 30 billion won for equipment investment at low interest rates.

Senior Secretary Ha stated, "The defense industry is a key sector supporting national security and a strategic industry leading advanced technology. The competitiveness of the defense sector cannot be secured by large companies alone. SMEs and startups must also grow together to ensure stable supply chains, improve quality, and accumulate technology in a sustainable manner."

This content was produced with the assistance of AI translation services.