Ministry of SMEs and Startups Holds Emergency Meeting to Respond to Ukraine Situation

[Image source=Yonhap News]

[Asia Economy Reporter Donghyun Choi] The Ministry of SMEs and Startups announced on the 28th that it held an emergency meeting to support damages in the SME sector related to Russia's invasion of Ukraine, which has recently escalated into a full-scale war.

The recent Ukraine situation has entered a serious phase following Russia's special military operation carried out on the 23rd. The United States and European countries are increasing economic sanctions against Russia, including bans on high-tech item exports, suspension of financial transactions with Russian banks, prohibition of government bond issuance, and halting approval of natural gas pipelines.

With oil prices and exchange rates already soaring, if sanctions such as export-import controls and SWIFT expulsion against Russia are further strengthened, our SMEs cannot avoid negative impacts on trade, capital, and energy/raw material markets. Exports from SMEs to Russia and Ukraine account for 2.8% (ranked 10th) and 0.3% (ranked 37th) of total exports, respectively. When Russia seized the Crimean Peninsula in 2014, exports to Russia decreased by 53.7% due to Western export controls.

So far, the government has prepared a comprehensive response plan for the Ukraine situation through the National Security Council (NSC) chaired by the President and the Foreign Economic Security Strategy Meeting. At the Ministry of SMEs and Startups level, participation in the government-wide 'Ukraine Situation Emergency Response Task Force (TF) Meeting' has been made to prepare for SMEs' raw material difficulties.

However, as the situation has rapidly changed recently, it was judged necessary to establish a system that can quickly link and provide necessary support according to the circumstances faced by SMEs, such as export and financial support and adjustment of delivery prices, leading to the convening of this emergency meeting.

The meeting included representatives from the Korea Federation of SMEs, export and financial support institutions such as the Korea SMEs and Startups Agency and the Korea Technology Finance Corporation, and the Korea Institute for Industrial Economics and Trade for in-depth analysis of SME impacts. They shared urgent support measures among institutions and discussed ways to build an effective joint response system.

Specifically, they reviewed operating damage reception desks through local offices, central associations, and regional headquarters of the agency, support for management stabilization funds due to temporary liquidity difficulties, and measures to adjust delivery prices due to sharp rises in raw material prices.

Kang Seongcheon, Vice Minister of the Ministry of SMEs and Startups, who presided over the meeting, said, “The Ukraine situation can have a significant impact on all our SMEs not only those involved in exports and overseas expansion but also due to various variables such as rising international energy prices and a strong dollar.” He added, “We must prepare meticulously assuming the worst-case scenario.”

Based on the results of this meeting, the Ministry of SMEs and Startups plans to promptly activate an emergency response team to provide necessary support to SME groups expected to be affected and resolve on-site difficulties through collaboration with the government-wide TF.

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