The South Korean government plans to double investment in pilot blockchain projects to 14.3 billion won this year. The government would also provide tax exemption up to 40 percent of research and development (R&D). However, companies said the state program is “politically sexy but economically unattractive.”

The number of blockchain projects for public services would double to 12 this year, from six last year.

The projects include the platforms to track food delivery, manage national archives, issue public documents without certificates from residents, and the other public services.

The Ministry of Science and ICT and the Korea Internet Security Agency (KISA) would encourage companies to initiate big-ticket projects.

However, the government said it would not allow initial coin offering (ISO), adding that blockchain technologies could grow without ICOs.

Many industry executives welcomed the government’s proactive stance but said these state-sponsored projects would not be profitable for the developers.

For example, startups could get funded in developing the blockchain platform, which would allow people to get civil affair documents without public certificates.

However, the platform would not generate attractive income because most public documents are available to the people free of charge, a Seoul startup executive said.

However, he said the government’s proactive stance would help us design business models, a healthcare startup CEO in Seoul said.

Another startup CEO said the tax exemption on R&D would also be of help to the industry for commercializing their products.

However, many CEOs are cynical over the government’s policy. An executive of the Korea Blockchain Startup Association said companies would stay away from the government’s pilot projects because they generate little revenue.

A Seoul CEO said many Korean blockchain companies had developed viable technologies, but they lack funds in commercializing and marketing their products.

Thus, the government should focus more on helping startups commercialize technologies rather than on R&D, he added.

Now is the time to create a market for blockchain technologies and their services, he added.