Transition to 'Hangari-type Economy'... Strong Small and Medium Enterprises' Economic Contribution to Reach 30% by 2030

Government Announces 'Innovative Small and Medium Enterprise Growth Strategy'
Increase to 1,000 World-Class Product Manufacturers by 2024
Fostering 12,000 Promising Digital, Green New Deal, and Materials, Parts, Equipment Companies

Prime Minister Chung Sye-kyun is delivering opening remarks at the Government Policy Coordination Meeting held at the Government Complex Seoul in Jongno-gu, Seoul on the 12th. Photo by Jin-hyung Kang aymsdream@

[Asia Economy Reporter Moon Chaeseok] The government has declared a transition to a 'jar-shaped economy' that strengthens the fundamentals of small and medium-sized enterprises (SMEs). The contribution of strong small and medium-sized enterprises and mid-sized companies, currently in the low 20% range, to the Korean economy will be raised to 30% by 2030.

On the 12th, the government announced the 'Innovation-type Strong Small and Medium-sized Enterprises Growth Strategy' at the National Policy Issue Inspection and Coordination Meeting chaired by Prime Minister Chung Sye-kyun at the Government Complex Seoul.

Currently, 95% of Korean SMEs have sales under 10 billion KRW, and it is rare for SMEs to grow into mid-sized companies. This year, the new coronavirus infection (COVID-19) has also struck.

Source: Ministry of Trade, Industry and Energy

The government announced that it has prepared growth policies tailored to company size and characteristics to revitalize SMEs and mid-sized companies and strengthen the fundamentals of the Korean economy.

Companies with sales around 300 billion KRW will be supported to enter the global market; companies with sales around 50 billion KRW will be grouped and nurtured as next-generation innovative companies such as those in the Korean New Deal; companies with sales around 10 billion KRW will receive support for manpower and technology respectively.

1.5 trillion KRW investment to expand the World Class 300 project to phase 2

Source: Ministry of Trade, Industry and Energy

The government plans to fully support the growth of world-class strong small and mid-sized companies and ensure that companies do not get stuck at the '10 billion KRW sales' growth barrier.

First, it will invest 1.5 trillion KRW to expand the World Class 300 and Excellent Company Research Center (ATC) projects into phase 2.

The number of world-class product manufacturing SMEs and mid-sized companies, which was 698 last year, will be increased to 1,000 by 2024.

This will be achieved by encouraging public institutions to prioritize purchasing innovative products selected by the government, thereby supporting performance acquisition.

Government-funded research institutes and universities will be attached to mid-sized companies to support core technology research and development (R&D) cooperation.

Source: Ministry of Trade, Industry and Energy

Technology cooperation bases will be established in strong countries of materials, parts, and equipment such as Germany, Israel, and Russia to support R&D and commercialization.

A representative example is the 'Korea-Germany Materials, Parts, and Equipment Technology Cooperation Center' established in Aachen, Germany, in June. Next year, a cooperation base will be established in Israel.

In 2024, 17.2 billion KRW will be spent to create a new 'International Joint R&D Track' to support technology cooperation in national strategic industries such as the Digital New Deal and BIG3 (Biohealth, Future Cars, System Semiconductors).

Fostering next-generation innovative companies in the Korean New Deal, materials, parts, and equipment sectors

Source: Ministry of Trade, Industry and Energy

By 2024, 12,000 promising companies in core national strategic fields such as the Digital and Green New Deals and materials, parts, and equipment will be discovered and nurtured.

Support will be provided to 3,500 energy innovation companies such as solar and wind power, 3,100 TIPS-based ventures and startups, and 400 top-tier, strong, and startup companies in materials, parts, and equipment.

Source: Ministry of Trade, Industry and Energy

To increase commercialization rates, support projects across ministries will be linked. Companies with excellent performance in support projects from the Ministry of Trade, Industry and Energy, Ministry of SMEs and Startups, Ministry of Science and ICT, and the Korean Intellectual Property Office will receive additional points in other ministries' projects. Fast-track procedures will be applied to ease licensing requirements.

1,000 innovative SMEs and mid-sized companies, including those in materials, parts, and equipment, will be selected to receive special guarantee support. Guarantees will be expanded from 3 billion KRW to 15 billion KRW. Acquisition tax and property tax will be reduced when establishing research institutes for early mid-sized companies.

600 leading regional mid-sized and strong small companies will be discovered. Currently, there are 100, but by 2022, 500 more will be found to increase the total to 600.

From next year, these policies will be applied to foster regional specialized industries. This is to meet regional demands for the Korean New Deal as well as the Regional Balanced New Deal.

Support to overcome the 10 billion KRW sales barrier... resolving manpower shortages

Source: Ministry of Trade, Industry and Energy

The government declared that it will overcome the chronic problem where promising companies fail to grow into mid-sized companies because they cannot surpass the '10 billion KRW sales' barrier.

First, the shortage rate of manpower in SMEs will be alleviated through strengthening incentives for SME employees and establishing a support system for professional manpower.

The collaborative model sharing contributions to the Tomorrow Filling Deduction Fund will be expanded. When providing special housing supply to SME workers, the scoring for employment period will be increased (from 60 to 75 points).

To strengthen employee capabilities, training to enhance artificial intelligence (AI)-related and utilization capabilities will be supported for 9,000 people by 2024.

Source: Ministry of Trade, Industry and Energy

Support for facility investment funds for growing SMEs will increase from 830 billion KRW this year to 1.15 trillion KRW next year. IP-backed loans will also expand from 1 trillion KRW to 1.4 trillion KRW.

Export channels will be expanded for somewhat larger companies with sales around 300 billion KRW. Two dedicated flagship stores for Brand K will be newly established (one domestic and one overseas) to greatly strengthen promotion and marketing support. The related budget will increase significantly from 380 million KRW this year to 6.2 billion KRW next year.

The government announced that it will form the 'Global Strong Small and Mid-sized Growth Support Group' led by Moon Seung-wook, Deputy Minister of the Office for Government Policy Coordination. The support group will prepare flagship project support measures by industry.

A government official said, "We plan to continue discussions on fostering innovative companies with industry and private experts using the 'Thursday Dialogue' chaired by the Prime Minister."

Source: Ministry of Trade, Industry and Energy

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