The Moon Jae-in administration took oath on May 10. Ever since then, the new government has put in a great deal of effort to actively communicate with the public. In fact, many think that the new administration has interacted more in the two days since the oath-taking than the previous government did in its entire four-year run.
Among Moon Jae-in’s various election campaigns, a website named “Moon Jae In 1st Avenue” drew attention as it was a novel attempt to raise awareness about their own political ideology online. The website now has a pop-up window that reads “it will start shipping the goods (policies) you purchased”. President Moon has come up with several
new policy suggestions specifically for the startup industry during the six official debates and other events. We would like to present an organized summary of what those are.
Establishing the ‘Fourth Industrial Revolution Committee’ under direct control of the President
One representative pledge that exhibits the President’s stance is the establishment of the ‘Fourth Industrial Revolution Committee’. It will support the core technologies related to the fourth industrial revolution. These technologies include electric cars, autonomous vehicles, renewable energy, artificial intelligence, and industrial robots. Currently, the areas related to the Fourth Revolution are scattered across many different ministries. The whole point of the new committee is to gather these fragmented efforts into a collective one under one committee. This also includes the idea of making it an industrial revolution.
A budget of KRW 2.5 trillion allocated to support startups and SMEs
According to the list of presidential election pledges, the President hopes to execute a total budget of KRW 178 trillion (USD 158.6 billion) during his term. The annual average budget is KRW 35.6 trillion. In this budget, the amount allocated to supporting entrepreneurship, small business owners, and SMEs is about KRW 2.5 trillion a year – which is about 7 percent of the total budget.
What draws our attention is lowering the bar of establishing a venture capital (VC) firm. This is in the form of lowering the standard for paid-in capital to KRW 5 billion as a qualification to become a VC firm. If this happens, we can expect more angel investments for startups.
Project name : ‘Roly Poly (It’s okay if you fail)’
Another interesting pledge of Moon’s is the project Roly Poly. It is basically a guarantee to entrepreneurs that they can revive even after failure, borrowing from the culture in Silicon Valley. We expect to see an enhancement of a culture where people can take risks without fearing failure. More specifically, this project includes ‘the establishment of a third generation rescue fund’ and ‘abolition of the bond guarantee system’.
On April 10, when Moon Jae-in was still a candidate, he mentioned that the government would like to support the revitalization of startups by subsidizing up to three times the amount. He also plans to expand the re-startup funding of the Small and Medium Business Administration. He said, “standing joint surety is a huge obstacle to the entrepreneurs as it puts everyone involved into the danger of completely losing their credibility” and ensured the abolition of solidarity guarantee.
The following is an excerpt related to the startup program:
[Founding fund, support for the market]
– Establishment of youth account in fund-of-funds
– Expansion of funding for young entrepreneurs
– Financial support for young entrepreneurs on four major public insurance namely health insurance, national pension, unemployment insurance and industrial accident.
– Expansion of support funds such as foundation support fund, fund-of-funds, and angel matching fund
– Guarantee of government’s participation in startup funding
– Providing grants to entrepreneurs, SMEs, and venture companies on public patents
– Cutting data costs for IT startups
– Reduction of paid-in capital for the establishment of a startup investment company (currently over KRW 5 billion)
– Education for rejuvenation of failed startups
– Project Roly-Poly
– Abolition of standing joint surety
– Adoption of negative regulation on new industries
– Elimination of regulation on public data usage by establishing a public big data center
– Elimination of reverse discrimination against small businesses
– Expansion of duration of maintaining SME status for startups acquired by conglomerates (currently 3 years)
– Removal of Active X
[Commitment to support for Fourth Industry]
– Smart car industry: Develop eco-friendly and smart car industry ecosystem such as rechargeable battery, electric car parts, charging infrastructure
– New and renewable energy industry: Medium and large sized lithium secondary battery industry for electric vehicles, energy storage devices, carbon capture and storage, smart grid
– Fusion composite new industry: bio, 3D printing, big data, artificial intelligence, virtual reality, augmented reality activation support
– Biotechnology and pharmaceutical industry: Establishing a mid to long-term comprehensive plan to raise policy predictability, improving the drug price structure to promote new drug development in Korea, and establishing drug development ecosystem
– Drone Industry: expansion of flight test grounds and control centers dedicated to drones, development of special license system for flying drones in out of sight areas, development of logistics drone
– Expanding the support of Small and Medium Business Administration to small and medium-sized venture companies
– Unification of policies across ministries
This article, entitled “What is the ‘startup support policy’ that will be delivered by Moon Jae-in’s 1st Street?”, was written in Korean by Platum, edited by AllTechAsia editors.