[Asia Exclusive] "From Consultation to Contract: Policy Fund Support Process Goes Non-Face-to-Face"

Interview with Kim Hak-do, Chairman of the Small and Medium Business Corporation
Expanding Online Consultations for Rapid Support
Integrated Support for Smart Factories, Workforce Training, and Aftercare
Proactive Autonomous Structural Improvement for Pre-Bankruptcy Recovery

Kim Hak-do, President of the Small and Medium Business Corporation, is being interviewed by Asia Economy on the 5th. / Photo by Moon Ho-nam munonam@

"The process of policy fund support, from consultation to contract, is being promoted to be non-face-to-face." The non-face-to-face approach in small and medium enterprise (SME) support projects is one of the key initiatives pursued by Kim Hak-do, President of the Small and Medium Business Corporation (SBC), since his inauguration. The reason for focusing on a non-face-to-face system is not merely to prevent the spread of COVID-19. In the COVID-19 era, rapid financial support is more important than anything else in a crisis situation where even highly potential companies can collapse if support is delayed. Since his inauguration in May, President Kim has witnessed firsthand the difficulties companies face due to COVID-19.

The Small and Medium Business Corporation (hereafter SBC) has started online consultations for swift support, and next year, an artificial intelligence (AI)-based evaluation system utilizing data will be introduced. Subsequently, non-face-to-face contract signing, omitting in-person visits, will be implemented. President Kim also introduced the 'Ambulance Man System,' which grants field inspection staff the authority to make quick support decisions, and the 'Fast Track,' which omits face-to-face evaluations, so that companies can receive necessary funds as quickly as possible while reducing the burden of evaluations.

Thus, President Kim has spent six months since his inauguration navigating the COVID-19 situation as a pillar for struggling companies and a stepping stone for growing companies. This period reflects the role of SBC and the tasks ahead as SMEs, which have experienced unprecedented difficulties, overcome the crisis and lay the foundation for growth. President Kim said, "We will support SMEs to overcome COVID-19 and, thereafter, to achieve innovative growth and job creation in areas such as non-face-to-face services." On the afternoon of the 5th, at the Small Business Distribution Center in Mok-dong, Yangcheon-gu, Seoul, we heard from President Kim about SBC’s role as the leading institution executing policy funds in the post-COVID era and how companies can effectively utilize these resources.

- With the increase in companies facing difficulties after COVID-19, SBC’s policies have undergone many changes.

▲ SBC supports many traditional manufacturing companies, which find facility investments difficult due to COVID-19 but still need operating funds. While demand for facility funds has decreased, demand for operating funds has increased, requiring regulatory changes to redistribute funds timely. SBC increased the emergency management stabilization fund budget from the original 100 billion KRW to a total of 1.3 trillion KRW through supplementary budgets and four revisions of the fund operation plan, supplying funds necessary for the management normalization of SMEs struggling with liquidity. Especially, due to the resurgence of COVID-19, 100 billion KRW out of the 300 billion KRW increased emergency management stabilization fund through the 4th supplementary budget was separately allocated to high-risk facility-operating SMEs restricted by business suspension or limitation measures.

- There have been criticisms from SMEs, the demand side, that SBC’s policy fund thresholds are high.

▲ Two systems were created to prevent short-term liquidity crisis companies from being excluded from policy fund applications due to financial reasons. One is the 'Corporate Presentation Review System' for marginal companies. In this system, applicant companies directly explain the uniqueness and differentiation of their technology, market size and growth potential, and sales growth to a panel of judges including private experts, who then decide on funding support. The 'Third-Party Re-evaluation Relief System' was also introduced, allowing companies that failed the policy fund evaluation due to exceeding debt ratios to be re-evaluated. The industry demands support for companies experiencing temporary difficulties. The role of policy funds is to serve as stepping stones for such promising companies to advance step by step.

Additionally, the types of projects will be reduced to make access easier for companies. By removing silos and simplifying conditions, companies will be able to use funds more efficiently from their perspective.

- Digital transformation in the SME sector to prepare for the post-COVID era is also important. How is SBC preparing?

▲ First, the digitalization of SBC support projects is underway, promoting non-face-to-face procedures for policy fund support. In export marketing support, a big data and AI-based non-face-to-face system is being established to manage the entire process from export strategy presentation to performance creation. Export support is being advanced through big data accumulated on the online export platform GoBiz Korea, providing strategies, buyer matching, and local sales. Consultations and evaluations are also transitioning to non-face-to-face methods, enhancing accessibility and enabling rapid support for export-challenged companies. Workforce training and job creation projects are also shifting to digital platform-based support systems, including online training and digital job matching. Interactive online live streaming training between instructors and trainees is being introduced, and digital-based employment support such as AI interview systems is being strengthened through the SME Workforce Difficulty Center for matching SMEs and job-seeking youth.

Kim Hak-do, President of the Small and Medium Business Corporation, is being interviewed by Asia Economy on the 5th. / Photo by Moon Ho-nam munonam@

- Support for manufacturing innovation fields such as smart factories is being strengthened for SME digital transformation. Could you share specific plans?

▲ Leading the digital paradigm shift, we plan to provide comprehensive support for SME digital manufacturing innovation, from smart factory introduction to professional workforce training and post-management. To expand smart factory dissemination and strengthen follow-up support for companies that have built smart factories, we are increasing dedicated funds for smart manufacturing sites. Additionally, we will establish more smart factory learning centers nationwide, providing production-based practical training facilities where technologies related to smart factories such as equipment control, production information, and big data can be acquired. Through long-term intensive courses combining online theoretical learning, face-to-face practical training, and individual company problem-solving projects, we aim to train 60,000 smart manufacturing professionals by 2022.

- What are the key projects you plan to focus on next year?

▲ Broadly, the focus is on SME re-leap and regional economic revitalization. First, we must support companies’ recovery. This is why we introduced the 'Proactive Voluntary Restructuring Program' to support companies with high recovery potential before bankruptcy. This program forms a council involving SBC and creditor banks to provide management normalization opportunities tailored to SMEs before compulsory procedures. Companies that were likely to go bankrupt under existing restructuring systems can get another chance. Based on financial due diligence results, liquidity supply, debt adjustment, and interest rate reduction are reviewed collectively through cooperation with financial institutions. As of last month, we identified 25 companies with IBK Industrial Bank and are in the process of selecting 16 companies for support. The goal is to support 10 companies this year.

Regional industry development is especially emphasized next year. We plan to create regional specialized programs, negotiating with local governments to support programs funded by dedicated funds. Also, we plan to discover 100 innovative growth SMEs annually, totaling 300, with high growth potential as 'K-Pre-Unicorn' companies, nurturing them as regional flagship companies.

Kim Hak-do, President of the Small and Medium Business Corporation, is being interviewed by Asia Economy on the 5th. / Photo by Moon Ho-nam munonam@

- Your field visits since taking office have been notable.

▲ The reason for frequent field visits is that companies may not know when SBC support is needed. SBC has a comprehensive system capable of executing various policies such as policy funds, export support, workforce training, startup and technology support, but companies often miss the timing for support and only seek help when financial conditions become difficult. Therefore, I visit the field to inform companies that SBC has the necessary financial support tools for each growth stage and to help them use these tools effectively. I also encourage SBC staff who interact with companies to provide optimal services from the companies’ perspective.

- How do you plan to lead SBC’s organizational development during your term?

▲ SBC’s greatest strength is its nationwide network of 32 field organizations, which over 41 years have accumulated policy execution know-how, regional industry trends, company status, and support information databases while working closely with SMEs. However, I felt that support policies tailored to common difficulties of SMEs by region and industry are somewhat lacking, as the focus has been on individual company-centered project execution. I aim to build a 'relay-style support system' that links segmented project supports simultaneously and sequentially, turning SBC’s strengths into a competitive advantage. Also, leveraging the nationwide field network, we will actively promote collaboration with local governments, universities, and related institutions to develop regional specialized industry activation plans, leading regional economic vitality and innovation, which are core to Korea’s New Deal.

Interview by Kim Min-jin, Head of SME & Venture Department enter@asiae.co.kr

Summary by Kim Cheol-hyun, Reporter kch@asiae.co.kr

Who is Kim Hak-do, President?

▲ Cheongju, Chungbuk ▲ Bachelor’s in International Economics, Seoul National University ▲ Master’s in Public Administration, Graduate School of Public Administration, Seoul National University ▲ Ph.D. in Political Economy, University of Southern California Graduate School ▲ Passed the 31st Administrative Examination ▲ Director of International Cooperation Division, Energy Management Team Leader, Ministry of Industry and Resources ▲ Director of Electric Power Industry Division, General Director of Resource Development, Ministry of Industry and Resources ▲ Director, Regional Development Committee ▲ Spokesperson, New Industry Policy Officer, Creative Industry Policy Officer, Free Trade Agreement Policy Officer, Ministry of Trade, Industry and Energy ▲ Director of Trade Negotiations Office, Director of Energy Resources Office, Ministry of Trade, Industry and Energy ▲ President, Korea Institute for Industrial Technology Promotion ▲ Vice Minister, Ministry of SMEs and Startups

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