The South Korean government's 'Innovation Product Procurement Program,' aimed at supporting companies with innovative technologies, has shown growth in numbers but limited effectiveness in enhancing public procurement.
According to a report by the National Assembly Budget Office on July 9, the government introduced the innovation product procurement system in 2019, setting a target of designating 5,000 products and achieving over 2 trillion won in public purchases by 2030. Since its inception, 2,774 innovative products have been designated from 2019 to last year.
These innovative products fall into two categories: Type 1, recommended by 17 ministries including the Ministry of Science and ICT, and Type 2, recommended by the Public Procurement Service. However, Type 1 products, recommended by the 17 ministries, account for only 65.4% of the total, indicating significant disparities in participation among ministries.
The growth rate of designations has also slowed. The annual number of designations was 623 in 2021 and 606 in 2022, but dropped to 284 in 2023, more than halving. Although there was a recovery with 422 in 2024 and 494 in 2025, these figures still fall short of previous levels.
Management of existing innovative products has been inadequate. Approximately 30.3% (841 products) of designated products have expired, yet some ministries have failed to designate replacement products. Conversely, only 29 products (1.1%) were canceled due to insufficient designation criteria, indicating a lack of effective management and a non-functioning exit system.
The efficiency of the designation process also requires improvement. The Procurement Policy Review Committee, which evaluates product designations, consists of 18 members and meets only 4 to 6 times a year. Given the increasing scale of product designations, the committee should convene more frequently to shorten review periods, the report suggests.
Purchase performance has been disappointing. Of the innovative products designated in the past six years, only 1,084, or 39.1%, have undergone pilot purchases. Additionally, 32.2% (892 products) of all innovative products have no public purchase records. While the overall purchase targets for public institutions have been met, the achievement rate per institution was only 54.7% as of last year.
Furthermore, the report highlights deficiencies in post-management systems and a lack of objective verification. Some institutions failed to submit pilot usage reports on time, and there have been instances of distributed innovative products being neglected. Existing studies have drawn different conclusions about the program's effectiveness, and research conducted by the Public Procurement Service has struggled to demonstrate policy impacts due to limitations in scope and methodology.
In light of these findings, the Budget Office recommends establishing a performance management system to continuously analyze the growth effects for participating companies and objectively verify the program's policy impacts.
Nam Myung-jin, a budget analyst at the Budget Office, emphasized, "We need to streamline the entire process from designation to purchase and post-management of innovative products to enhance the efficiency of budget inputs and ensure that public innovation procurement leads to company growth and improvements in public services."
* This article has been translated by AI.
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