Overcoming COVID-19 'Revitalizing Local Economies'... Spread of SME Associations and Local Government Ordinances

Small and Medium Enterprise Cooperatives
Increase in Ordinance Enactment from Metropolitan to Basic Local Governments

Headquarters of the Korea Federation of Small and Medium Business

[Asia Economy Reporter Kim Daeseop] Amid the challenging times caused by the novel coronavirus disease (COVID-19), there is a growing trend of enacting 'Ordinances to Support the Promotion of Small and Medium Enterprise (SME) Cooperatives' that can revitalize local economies. SME cooperatives and local governments are collaborating to restore the competitiveness of small and medium enterprises and small business owners, pooling efforts to recover regional economies in crisis and create jobs.

According to the Korea Federation of SMEs on the 13th, following metropolitan local governments, basic local governments are increasingly enacting ordinances to support the promotion of SME cooperatives. Since the first such ordinance was established in May this year in Yeosu City, Jeollanam-do, the number of regions enacting these ordinances has expanded to include Jeonju City in Jeollabuk-do, Changwon City in Gyeongsangnam-do, and Nowon District in Seoul.

The Korea Federation of SMEs plans to encourage local governments to actively enact ordinances supporting SME cooperative promotion through regional headquarters. The goal is to have at least 13 basic local governments enact such ordinances by the end of this year. Every year, through consultations with heads of basic local governments and local councils, the number of regions enacting ordinances to support SME cooperative promotion will be increased. There are a total of 226 basic local governments nationwide.

Kim Ki-moon, chairman of the Korea Federation of SMEs, stated to employees this year, "We will promote the enactment of dedicated local ordinances for SME cooperatives in basic local governments beyond metropolitan local governments."

The Korea Federation of SMEs is striving to ensure that the enactment of ordinances supporting SME cooperative promotion spreads quickly to all local governments. Thanks to these efforts, all metropolitan local governments except Sejong City have enacted ordinances supporting SME cooperative promotion. Starting with Chungbuk in August last year, 16 out of 17 metropolitan local governments, including Gwangju, Daegu, Seoul, and Gangwon, have enacted such ordinances.

Article 9 of the SME Cooperative Act stipulates the obligation of local governments to cooperate with SME cooperatives, but for the past 58 years, there have been no related ordinances, limiting support for SME cooperatives. However, since last year, the enactment of ordinances supporting SME cooperative promotion by local governments has been steadily expanding.

The main contents of the ordinances supporting SME cooperative promotion include policy formulation, activation promotion, and market expansion promotion. These include ▲ the establishment and implementation of plans to activate SME cooperatives ▲ various management supports such as professional advice and information provision necessary for the establishment and operation of SME cooperatives ▲ efforts to expand sales channels through SME cooperatives ▲ support for joint projects ▲ and the establishment of cooperative systems among SME cooperatives and related institutions and organizations.

An SME cooperative is an organization formed by small and medium enterprise owners joining forces to carry out cooperative projects. It is a non-profit corporation established under the SME Cooperative Act with the purpose of improving the economic status of small and medium enterprise owners and promoting balanced development of the national economy. Currently, 930 SME cooperatives are active nationwide.

SME cooperatives serve as focal points for solidarity and collaboration among small and medium enterprises, making them suitable models for regional economic revitalization. The profits generated from joint purchasing, research and development, production, sales, transportation, and other projects carried out by SME cooperatives are returned to the member small and medium enterprises and small business owners, creating a virtuous cycle.

The Korea Federation of SMEs expects that the enactment of ordinances supporting SME cooperative promotion will be an effective policy to revive local SMEs and create local jobs. The effects of ordinance enactment are already visible. For example, the Yeosu Ocheon Industrial Complex Food Processing Business Cooperative, composed of about 30 small and medium enterprises related to food processing located in the Yeosu Ocheon Industrial Complex in Jeollanam-do, has received subsidies for joint projects such as the operation of a joint wastewater treatment plant through the enactment of the ordinance.

Hwang Jaemok, head of the Cooperative Policy Office at the Korea Federation of SMEs, said, "We plan to continue producing successful cases of ordinance enactment supporting SME cooperative promotion like Yeosu Ocheon Industrial Complex," adding, "We will conduct campaigns to raise awareness of the need for local ordinances and disseminate excellent cases."

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