Germany should back R&D, streamline regulations – VCI

LONDON (ICIS)–The German government should increase financial incentives for research and development (R&D) to increase the share of spending on new technologies as a proportion of GDP, and streamline regulatory obstacles for chemicals companies, industry body VCI said on Wednesday.

The association welcomed news that German Chancellor Angela Merkel has pledged to increase R&D spending to 3.5% of GDP by 2025 from current levels of around 3%, but claimed that additional incentives and a reevaluation of the country’s regulatory framework are necessary to achieve that.

“Germany is a good location for turning ideas into innovations. But this country is not ranking at the very top in the international innovation competition,” said Thomas Wessel, VCI’s chairman of the committee for research, science and education.

70% of the country’s chemicals and pharmaceutical companies are continuously engaged in R&D compared to 30% for industry as a whole, Wessel said, representing €10.8bn of investment in 2016.

However, due to the disproportionate level of investment the chemicals sector pours into research, that figure would need to increase to €13bn, a 20% increase at a time when the bulk of spending by many Germany-based chemicals majors is focused outside the country.

Aside from increased fiscal incentives for keeping research in the country, VCI argued that innovation should feature more prominently in impact assessments of new regulation, to avoid stifling the development of new products and technologies.

Over 60% of chemical and pharmaceutical companies find regulatory obstacles in Germany highert than those in other countries, the VCI added.

“We will not reach the 3.5% target without extra incentives and without framework conditions that are conducive to innovation and investment,” Wessel said.

The body also pushed for a shift in tone toward new innovations, arguing that a more welcoming social outlook would speed the take-up of new technologies.

“Instead of scepticism, we need a societal climate where the chances and risks of new technologies are assessed in a well-balanced manner. Otherwise, technical progress is hardly possible,” Wessel added.

Image: Thomas Wessel, VCI’s chairman of the committee for research, science and education. Source: VCI