The government plans to provide financial support to Korean companies seeking to take over overseas firms in the plant design and engineering, embedded software and system-on-chip businesses.

The government is promoting the scheme to rapidly cultivate talent in those areas with high-value technologies.

“The Industry Ministry is in discussion with K-Sure, the nation’s official export credit agency, to develop a plan to support partial loss incurred during the M&As,” said a ministry official.

“The M&A fund support plan is aimed at acquiring overseas talent in high value-creating businesses that Korean companies haven’t developed yet in a short period of time.’’

The plan was included in a set of action plans to cultivate high value-creating businesses in industry. Industry Minister Yoon Sang-jick presented the plan at a meeting of economic ministers in Seoul on Wednesday.

“Korean companies have focused on low-margin and labor intensive manufacturing processes in their business value chain, but it is time for them to move their business focus into high value-creating areas like design and engineering for future growth,” the ministry said in a press release.

The ministry has struggled to find how to foster high value-creating industry as a next growth engine. The country’s per capita income has remained stagnant for nearly seven years since it reached $20,000 in 2007, while other advanced countries, such as Japan and Germany, have been able to raise their per capita income from $20,000 to over $30,000 in less than five years.

“This (slow growth) is due to the country’s lack of creativity and innovative capacity to replace input-driven growth and counter China’s rapid rise,” the ministry said.

To shift the focus to high value-creating processes, the ministry will designate up to 300 high value-creating businesses by 2017, entitling the companies to various incentives, including tax breaks.

The ministry also will introduce initiatives to cultivate more engineers. The shipbuilding industry, for instance, has complained of a lack of engineers, while shifting its business focus from shipbuilding to offshore plant and sub-sea businesses. According to government data, Korea shipbuilders currently take about 31 percent of global orders for offshore industrial plants every year, but about 30 to 40 percent of that amount is then outsourced to foreign engineering firms due to the country’s lack of technology and human resources.

To train more engineers, the government will establish up to 20 engineering design research centers by 2017 while also increasing the number of graduate schools to 10 from the current one by 2020. Together, the institutes will train about 1,500 engineers per year, the ministry said.

By Seo Jee-yeon  (jyseo@heraldcorp.com)