SME Industry "Welcomes Expansion of Financial Support... Must Execute Swiftly for On-Site Impact"

At the second emergency economic meeting related to COVID-19 held at the Blue House on the 24th, attended by President Moon Jae-in, Minister of SMEs and Startups Park Young-sun, and other cabinet members, support measures such as expanding disaster recovery funds are being discussed. Photo by Yonhap News

[Asia Economy Reporters Daeseop Kim, Chulhyun Kim, Hyewon Moon] The small and medium-sized enterprises (SMEs) and small business sectors have expressed their welcome for the government's expansion of financial support related to the novel coronavirus disease (COVID-19). The industry also urged for swift execution so that SMEs and small business owners can feel the effects on the ground.

According to related associations on the 25th, the 'COVID-19 Related Financial Market Stabilization Measures' jointly announced by government agencies the previous day are expected to help alleviate financial difficulties for SMEs and small business owners. Jung Yunsook, Chairwoman of the Korea Women Entrepreneurs Association, stated, "There are high expectations for financial support, and we are receiving many inquiries."

A representative from the Korea Federation of SMEs emphasized, "While the direction to expand financial support for SMEs and small business owners is welcome, it is important to execute it quickly so that it can be felt on the ground. Also, continuous monitoring of the on-site execution status is necessary." A representative from the Korea Federation of Small and Medium Business also said, "It seems to help alleviate the financial difficulties of small business owners, but practical and direct support measures need to be prepared as follow-up."

Among the government's 100 trillion won scale livelihood and financial stability package supply plan, financial support for SMEs and small business owners by policy financial institutions (1st Emergency Economic Meeting) amounts to 29.2 trillion won. At the 2nd Emergency Economic Meeting held on the 24th, additional expansion of financial support for SMEs and mid-sized companies was made to 29.1 trillion won (including large companies if necessary).

A representative from the Main-Biz Association evaluated, "At this point, the plan to expand the scale of financial support such as special guarantee support for SMEs and small business owners seems to be at an appropriate level."

On the business front, damage caused by COVID-19 continues. In the case of exhibition company A, more than half of the company's employees were reduced after the COVID-19 outbreak. Sales in February decreased to one-third compared to the previous year, and from this month, there have been no sales. SME manufacturer B in the Daegu region is in urgent need of expanded employment retention subsidies. Due to the impact of COVID-19, there is a shortage of production personnel, and raw material supply is not properly secured, causing production disruptions. Despite almost no sales, they must maintain employee employment.

A representative from the Korea Venture Business Association said, "In the case of venture companies, startups and early-stage ventures are negatively affected by the economic downturn, impacting the investment market. Additional investments or fundraising may face difficulties."

The SME, mid-sized, and small business sectors express concern about the current economic situation and say additional government measures are necessary.

Park Yanggyun, Head of Policy at the Korea Federation of Mid-sized Enterprises, said, "The economy is in a difficult situation. Policy formulation and execution must be comprehensive. A situation more serious than the foreign exchange crisis could occur." He also emphasized the efficiency of policy execution, saying, "The government continues to announce support policies, but there are limits to government finances," and added, "Support policies are also needed to proactively restructure or sell distressed companies so that they can be absorbed by the market."

A representative from the Korea Women Venture Association said, "Companies are struggling with immediate financial problems, so efforts to improve accessibility to loans and such are also necessary."

The SME sector also emphasized the need for various measures that actively reflect voices from the field beyond financial support. A representative from the Innobiz Association said, "Financial support is obviously necessary, but various measures such as extending public procurement delivery periods and addressing on-site difficulties are also needed."

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