"Activation of Joint Projects for SME Cooperatives"... Effective from the 21st of This Month

[Asia Economy Reporter Kim Daeseop] Small and medium-sized enterprise (SME) cooperatives will be able to engage in joint projects to strengthen SMEs' bargaining power and secure price competitiveness without worrying about violating the Fair Trade Act. As joint projects by SME cooperatives become more active, their negotiating power regarding transaction conditions with large corporations is expected to increase, creating an opportunity to establish a fair market economy.

According to the Ministry of SMEs and Startups on the 12th, the amendment to the "Enforcement Decree of the SME Cooperative Act," which stipulates the requirements for cooperatives subject to the law, was approved at the Cabinet meeting yesterday. This is a follow-up measure following the amendment to the SME Cooperative Act (August 20 last year) that excludes the application of the Fair Trade Act to joint acts by SME cooperatives.

The enforcement decree was prepared by extensively reflecting field opinions, including establishing measures to guarantee free and fair participation of cooperative members. Accordingly, cooperatives that are operating normally, have no violations of the Fair Trade Act, and possess the articles of incorporation and regulations necessary for promoting joint projects will be able to freely pursue joint projects.

The decree will take effect from the 21st of this month. Joint projects include joint production, processing, order receipt, sales, purchasing, storage, transportation, trademarks (brands), services, and complex development.

Until now, although the SME Cooperative Act allowed various joint projects by SME cooperatives, the Fair Trade Act comprehensively restricted joint acts among SMEs or business associations, making it highly likely that cooperative joint projects would violate the Fair Trade Act.

As a result, cooperative joint projects had been shrinking. Among approximately 940 SME cooperatives, only 64.5% were conducting joint projects, with the majority focusing on joint purchasing and government-commissioned projects.

The amendment to the "Enforcement Decree of the Act on the Promotion of Purchase of Products Developed by SMEs," which aims to improve the priority procurement contract system with SMEs and increase the purchase target ratio of SME technology development products, will also be implemented.

The enforcement decree improves procurement contracts by allowing public institutions such as national agencies and local governments to expand the scope to SMEs from the beginning and conclude contracts when there are no qualified small enterprises or only a few in competitive bidding among small enterprises and small merchants for goods and services under 100 million KRW.

The purchase target ratio for priority purchase technology development products will be raised from the current 10% to 15%. This is expected to reduce administrative inefficiencies caused by repeated failures in bidding due to the absence of qualified small enterprises for certain goods and services.

Furthermore, as smooth contracting by public institutions becomes possible, competition within the procurement market is expected to be stimulated. From next year, it is estimated that public institutions will make additional purchases of technology development products worth about 300 billion KRW.

In addition, amendments to the "Enforcement Decree of the Act on the Protection and Support of Small Merchants" and the "Enforcement Decree of the Act on Support for Startup of Small and Medium Enterprises" were also approved at the Cabinet meeting on the same day and are scheduled to take effect from the 21st of this month.

This content was produced with the assistance of AI translation services.