This Year’s Public Procurement Market SME Product Purchase Target 103 Trillion Won... Last Year Surpassed 100 Trillion Won for the First Time in History

Source=Ministry of SMEs and Startups

[Asia Economy Reporter Kim Daeseop] The purchase scale of small and medium-sized enterprise (SME) products in the public procurement market has surpassed 100 trillion won for the first time in history. Amid the sharp contraction of domestic market demand due to the spread of the novel coronavirus infection (COVID-19), the increase in the purchase amount of SME products in the public procurement market is expected to help resolve difficulties in sales channels.

On the 28th, the Ministry of SMEs and Startups announced that after the '2020 SME Products Public Purchase Target (draft)' was reviewed and approved at the Cabinet meeting, the purchase amount of SME products in 2019 reached 105 trillion won, an increase of 11 trillion won from 94 trillion won in 2018.

A total of 837 institutions, including national agencies, local governments, and public institutions, are required to fulfill the purchase targets for SME products according to the Act on Support for Small and Medium Enterprises' Sales Channels and other related laws. The increase in total purchase amount last year was influenced by individual institutions' efforts to raise the purchase ratio of SME products (the proportion of SME product purchases in total purchases).

Looking at the purchase status of SME products in the public procurement market, purchases of technology-developed products and products from women-owned and disabled-owned enterprises increased significantly compared to 2018. Among all institutions, those with the largest increase in SME product purchase ratios last year were Gyeonggi Provincial Government, Incheon International Airport Corporation, and the Ministry of Education, in that order. Institutions with the largest increase in purchase amounts were Korea Water Resources Corporation, Gwangju Metropolitan City Hall, and Gyeonggi Provincial Government, respectively.

The purchase target for SME products by the 837 institutions this year was calculated at 103.4 trillion won. This is an increase of 9.6 trillion won compared to last year's target of 93.8 trillion won. The size of the public procurement market reaches up to 130 trillion won, and in both last year and this year, about 78% of this consists of SME product purchases.

The Ministry of SMEs and Startups expects that the purchase amount of SME products will exceed 105 trillion won this year, citing that many target institutions tend to set their targets conservatively.

Lee Hee-jung, Director of the Sales Channel Policy Division at the Ministry of SMEs and Startups, said, "The increase in the purchase amount of SME products in the public procurement market is expected to play a buffering role against the domestic demand cliff caused by the impact of COVID-19."

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