More incentives necessary for faster growth
As apprehensions are increasing about whether Daedeok Innopolis will be able to induce enough larger domestic companies or foreign investors to take root as a worldwide R&D cluster, Daedeok Innopolis is standing at the crossroads today.
The success of Daedeok Innopolis is actually an important touchstone. It will indicate whether or not Korea can continue steady growth or get stalled in a rapidly changing science technology based economic system.
This project is a national innovation task which is expected to increase national innovation system construction. Assemblyman Lee Sang-min who has his stronghold in Daejeon, Yusung district, Korea, expects this project to nurture a new growth engine base with new technology, creative manpower, and entrepreneurial spirit. However, pangovernmental support and collaboration are not coming through.
In a nutshell, the Assemblyman maintains: "Eventually, in order for Daedeok Innopolis to take root as a global R&D cluster, an inducement measure is needed such as a bold tax system support in the light of the fact that superior science technology men are not eager to come to a locality due to Seoul-centered Korea society's structure including education problem as well as culture activity's gap with Seoul."
Political and regional issues
In an exclusive interview with the Korea IT Times, Assemblyman Lee emphasized that both the central government and local autonomous entities like Daejeon should strive to foster a good environment here in Daedeok. This will have two positive outcomes. First, promising laboratories at home and abroad will be able to commercialize their R&D products. And second, entrepreneurs and investors at home and abroad will be able to be confident about their investments.
In that regard, Lee points out that the central government will have to recognize from now on that a tax system is also an investment tool. He added that tax system support also has to be regarded as a means for policy execution.
As part of such heavy tax system support for Daedeok Innopolis, Lee is propelling a legislation proposal that includes a number of tax breaks. It includes a 100% reduction in corporate tax and income tax exemption clause over 7 years, a 50% reduction and exemption clause for 5 years, a 100% customs exemption, an acquisition and registration tax exemption clause, and a 100% property tax exemption clause over 7 years as well as a 50% reduction and exemption during 5 years for qualifying companies.
The Assemblyman stressed that the tax system support plan is an indispensable prerequisite in order for Daedeok Innopolis to succeed. He went on to emphasize that as the first pilot project case of the current Participatory Government, Daedeok Innopolis must succeed.
Tax incentive support
He worried that many people hold skeptical standpoints about Daedeok Innopolis' future. He also pointed out that if Daedeok Innopolis doesn't change from the former days of its special zone designation, it is not different from the representative display administration. In fact, such apprehensions stem from the fear that the government doesn't really have a firm will about the Daedeok Innopolis project, according to Lee. These apprehensions persist even though President Roh Moo-hyun pledged the Participatory Government's whole-hearted support through his speech at the Daedeok Innopolis vision proclamation ceremony on March 31 of last year.
In a special measure, the Assemblyman pointed out the highly partitioned culture of our bureaucratic society doesn't allow mutual networking, because intervening in another ministry's sphere is impossible.
Due to such a highly partitioned culture, total governmental collaboration about issues such as support for the Daedeok Innopolis project doesn't happen in reality. Cooperation between the Ministry of Information and Communication (MIC), the Ministry of Finance and Economy (MOFE), the Ministry of Commerce, Industry and Energy (MOCIE), and the Ministry of Education & Human Resources Development (MOE) isn't seen right now, Lee said.
He went on to say that special selection and concentration principles must also be applied in relation to the tax system support plan for the success of Daedeok Innopolis.
The Assemblyman maintained: "Daedeok Innopolis has to present exceptional conditions to attract corporations or research institutes into its Innopolis and at the same time, to compete with several Free Economic Zones in Korea such as Incheon Free Economic Zone or surrounding competing countries."
In that respect, he said once again that it is most important for the central government or the local government to forge an environment that fosters incentives in his area. Daedeok Innopolis can succeed as a worldwide innovation cluster by creating laboratory enterprises, founding cutting-edge technology corporations and encouraging larger companies' penetration into Innopolis as a national R&D special zone.
Regarding the educational circle's problems, the Assemblyman notes that in order to develop Daedeok Innopolis, innovation must first happen in educational circles. He went on to point out that close community bonds between research institutes and universities are not present right now.
The selection and concentration principle
With regard to recent movements to enlarge Daedeok Innopolis up to South Chungnam province or North Chungchung province, the Assemblyman spoke in a determined manner: "I am strongly opposed to such movement in that Daedeok Innopolis' success condition is based on Selection and Concentration's principle and some political faction's interests or regional egoism must be excluded." He strictly warns that if Daedeok Innopolis' current area is enlarged up to the South Chungchung or North Chungchung province, its successful development will be impossible while wasting the taxpayer's precious money. The expansion will only result in some local autonomous entities sharing restricted national resources according to petty political faction interests or regional egotism.
Finally, Assemblyman Lee underscored the importance of Daedeok Innopolis once more by saying that it is a nationally important task which must be guided from a standpoint of selection and concentration, not from the standpoint of balanced regional development.