1.5 Trillion Won in Support Over 5 Years Fails to Deliver... 9 out of 10 Marginal Companies Still Struggling

This year, 412.4 billion won in national R&D funds executed; Marginal companies account for 19.61% of all supported businesses
Conversion rate to normal companies falls from 20.8% to 12.0%; 22 companies suspended or closed over the past two years

The government is increasing research and development (R&D) support for marginal companies, but the actual results of business normalization have been steadily declining.

According to data submitted by Assemblyman Song Jaebong of the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee from the Ministry of Trade, Industry and Energy, a total of 1.5317 trillion won in national R&D funds was provided to 2,968 marginal companies over the past five years, from 2022 until August of this year.

The government is increasing research and development (R&D) support for marginal companies, but the actual results of management normalization have been decreasing. Image representing businesspeople. Getty Images Korea

The amount of support increased from 205 billion won (for 458 companies) in 2022 to 365.1 billion won (for 686 companies) last year. For this year, 412.4 billion won has already been executed for 646 companies as of August, surpassing the total for last year.

The proportion of marginal companies among all R&D-supported businesses also rose each year, from 16.52% in 2022 to 19.43% last year, and 19.61% as of August this year. Currently, one out of every five companies receiving R&D support from the Ministry of Trade, Industry and Energy is a marginal company. A marginal company refers to a business whose interest coverage ratio has remained below 1 for three consecutive years, meaning it cannot pay its loan interest with its operating profit.

However, despite the expanded scale of support, the number of companies that overcame business crises has continued to decrease. Of the 1,333 marginal companies last year, only 160 transitioned to normal companies, amounting to just 12.0%. This conversion rate dropped by 8.8 percentage points compared to 20.8% in 2022.

Even with R&D support, 22 marginal companies were either suspended or closed over the past two years, including 17 in 2022 and 5 last year, because they could not overcome business deterioration.

Assemblyman Song stressed, "The government needs to rigorously evaluate the marketability and commercialization potential of technologies during the selection phase to meticulously identify promising companies, and promptly establish a comprehensive post-management system that connects market development and commercialization finance in a multifaceted way after the conclusion of technology development."

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