Data show 3 of 19 South Korean ministry AI transition projects under 30% budget execution
Version 2: The smart manufacturing support project's budget is corrected to 98 billion won, of which 4.97 billion won was spent, and the ministry's explanations for the delays are added.
In short
An analysis of data submitted by South Korea’s Ministry of SMEs and Startups found that three of its 19 AI transition (AX) projects for 2026 had spent less than 30% of their budgets as of last month, according to lawmaker Kwon Hyang-yeop of the Democratic Party. The lowest was the smart manufacturing support project for small manufacturers, which had spent 5.1%, or 4.97 billion won, of its 98 billion won budget. Kwon said the ministry must raise the effectiveness of the projects so that AI infrastructure reaches small firms and self-employed people faster.
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An analysis of data submitted by South Korea’s Ministry of SMEs and Startups found that three of its 19 “AI transition” (AX) projects for 2026 had actual budget execution rates below 30% as of last month, according to lawmaker Kwon Hyang-yeop of the Democratic Party, who sits on the National Assembly’s Industry, Trade, Energy and SMEs Committee. Yonhap and Chosun Ilbo both reported the finding on October 7. [ 1 , 2 ]
The lowest rate was in the smart manufacturing support project for small manufacturers, which aims to bring automation equipment and smart technologies such as AI and the internet of things to manual production lines. It had spent 5.1%, or 4.97 billion won, of its 98 billion won budget, Yonhap and Chosun Ilbo reported, citing the Ministry of Planning and Budget’s inspection of projects suspected of irregularities as a reason for the delay. The AI assistant project for small business owners, designed to learn information and data and then provide tailored consultations and policy suggestions, spent 14.7%, or 730 million won, of its 5 billion won budget. The smart manufacturing innovation personnel training project spent 27.8%, or 1.67 billion won, of its 6 billion won budget. [ 1 , 2 ]
The ministry told Chosun Ilbo that most of the AI assistant budget is set aside for research contracts, so execution appears low until the contracts are completed, and that it could reach about 50% in December and over 90% in the first quarter of next year. It said the training project was newly funded through an April supplementary budget and that spending would begin in stages as internships start in October. [ 2 ]
Three other projects were below 75% execution: the Eardream School startup AI talent programme at 68.5%, small business smart technology distribution at 71.9%, and small business online sales support at 73.4%. Kwon said that many of the ministry’s core AX projects showed low execution rates as the fourth quarter began, and that effectiveness must be raised so that AI infrastructure reaches SMEs and the self-employed quickly. Chosun Ilbo said budget delays in some projects had led to calls to hurry the AI transition for SMEs and the self-employed. [ 1 , 2 ]
ZDNet Korea treated the figures as the starting point for a debate among three AI chatbot “panels” on whether AI transition subsidies should keep being funded when results are lacking. One participant argued that low execution does not mean failure, since AI research and development proceeds non-linearly, and that stopping investment on short-term indicators could cost national competitiveness. Another said the low rates reflect failures in demand verification and procurement, and that projects below 30% should be halted or fully redesigned. A third framed the problem as SMEs’ difficulty turning technology into sales and proposed a commercial readiness measure alongside technology readiness. [ 3 ]
Why it matters
The figures put the ministry’s flagship AI transition programme under parliamentary scrutiny with the year’s final quarter already under way, and a lawmaker is calling for faster delivery to small businesses and the self-employed. How the ministry responds — speeding up spending or restructuring projects — could shape the pace at which its AI support reaches smaller firms. Coverage also frames a wider question about how such technology spending should be judged.
Key facts
- As of last month, 3 of the Ministry of SMEs and Startups’ 19 AI transition (AX) projects for 2026 had real budget execution rates below 30%, according to an analysis of ministry data by Rep. Kwon Hyang-yeop. [ 1 , 2 ]
- The smart manufacturing support project for small manufacturers recorded the lowest execution rate, 5.1%, or 4.97 billion won of its 98 billion won budget. [ 1 , 2 ]
- The AI assistant project for small business owners spent 14.7%, or 730 million won of its 5 billion won budget. [ 1 , 2 ]
- The smart manufacturing innovation personnel training project spent 27.8%, or 1.67 billion won of its 6 billion won budget. [ 1 , 2 ]
- Three other projects were below 75%: the Eardream School startup AI talent programme at 68.5%, small business smart technology distribution at 71.9%, and small business online sales support at 73.4%. [ 1 , 2 ]
- The smart manufacturing support project’s spending was held back partly because of the Ministry of Planning and Budget’s inspection of projects suspected of irregularities. [ 1 , 2 ]
- Kwon said many of the ministry’s core AX projects showed low execution rates as the fourth quarter began, and that effectiveness must be raised so AI infrastructure reaches SMEs and the self-employed quickly. [ 1 ]
Confirmed by several sources
- Three of the ministry’s 19 AX projects had real execution rates below 30% as of last month, based on data the ministry submitted to Rep. Kwon Hyang-yeop. [ 1 , 2 ]
- Rep. Kwon Hyang-yeop, a member of the National Assembly’s Industry, Trade, Energy and SMEs Committee, released the analysis of the ministry’s data on October 7. [ 1 , 2 ]
- The smart manufacturing support project for small manufacturers had spent 4.97 billion won, or 5.1%, of its 98 billion won budget for this year. [ 1 , 2 ]
- Kwon called for the ministry’s AI transition support for SMEs and the self-employed to move faster, with the fourth quarter of the year already under way. [ 1 , 2 ]
Still unclear
- Whether the low execution rates indicate project failure or are a normal part of technology development. This is disputed: a ZDNet Korea panel discussion featured one participant arguing low execution reflects technical milestone rescheduling in AI R&D, and another calling it a structural failure in demand verification and procurement.
- What will happen to the projects with the lowest execution rates. One participant in the ZDNet Korea discussion argued projects below 30% should be stopped or fully redesigned, but no decision by the ministry is reported in the documents.
- Whether the AI assistant and personnel training projects will catch up on spending as the ministry expects. The ministry’s explanations and its forecast of about 50% execution in December and over 90% in the first quarter of next year for the AI assistant project were reported only by Chosun Ilbo, and the results of the inspection affecting the smart manufacturing project are still being compiled.
What local media are saying
Timeline, local time
- Yonhap publishes the analysis of ministry data showing 3 of 19 AX projects with execution rates under 30%. [ 1 ]
- Chosun Ilbo reports the same finding, saying budget execution has been delayed with less than three months left in the year. [ 2 ]
- ZDNet Korea publishes a panel discussion on whether AI transition subsidies should continue without results. [ 3 ]