'Joint Ventures, Deregulation, and ESG'... Revitalizing SME Associations Over 3 Years

[Asia Economy Reporter Donghyun Choi] On the 17th, the Ministry of SMEs and Startups announced that it has established the '3rd Three-Year Plan for Revitalizing SME Cooperatives' to expand innovation nutrients for SMEs through a new leap forward.

SME cooperatives are highly important as an alternative model that overcomes economic and social crises while creating new opportunities. So far, the government has supported joint projects centered on SME cooperatives based on the judgment that the future response capabilities of SMEs are directly linked to their survival and leap forward.

However, amid rapid changes in the business environment such as digital transformation, carbon neutrality, and supply chain restructuring, SMEs face many obstacles to overcome. This plan focuses on positioning SME cooperatives as a ‘collaboration platform’ that responds quickly and flexibly to domestic and international environmental changes. In particular, it is a customized support plan prepared by broadly reflecting field voices from surveys and experts.

The four major strategies prepared by the government consist of ▲strengthening competitiveness ▲expanding collaboration infrastructure ▲improving systems for new industry inflow ▲enhancing responsiveness to environmental changes.

The government will first strengthen the competitiveness of SME cooperatives and SMEs through the establishment and reinforcement of joint projects. To this end, it will newly promote and continuously expand joint projects that provide customized support in a ‘menu-style’ manner across the entire value chain including production, marketing, logistics, and sales.

This year, a 7 billion KRW scale performance-sharing joint research and development (R&D) project will be introduced to link excellent outcomes to innovative procurement, promoting joint projects throughout the entire cycle. In particular, to alleviate the burden on SMEs caused by the sharp rise in prices of raw and subsidiary materials, guarantee support will continue for joint purchases, and win-win cooperation-type market development through collaboration between large corporations and export consortia will also be promoted.

In addition, the government will establish ‘public-private collaboration funding’ and a ‘professional workforce training system’ to support the expansion of collaboration infrastructure. To revitalize joint projects centered on SME cooperatives, a ‘voluntary win-win fund’ involving private sector participation will be created by 2024 with a scale of 100 billion KRW, to be used as funding for joint facility construction and joint responses to carbon neutrality and ESG (environment, social, governance) issues.

Funds dedicated to SME cooperatives for cooperative policy financing will be utilized to support joint equipment and facility funding, providing foundational capital for self-sustainability. ‘Visiting education’ will also be conducted, strengthening on-site and online training for member companies of SME cooperatives.

Furthermore, as part of regulatory improvements to promote the inflow of new industries, related laws on SME cooperatives will be revised. By actively reflecting field voices, requirements such as business areas of project cooperatives, minimum number of promoters, and minimum capital contributions will be relaxed to enable quick and flexible responses.

To promote efficient joint projects, the establishment of ‘cooperative joint project corporations’ under the Small and Medium Enterprise Cooperative Act will be stipulated, and grounds for holding general meetings and board meetings electronically (including rights to express opinions and voting rights) will also be prepared.

Responsiveness to urgent issues such as carbon neutrality and ESG will also be enhanced. Carbon reduction consulting for major production facilities of SME cooperatives and support for establishing emission volumes and reduction plans by industry and process will be provided, while industry difficulties will be surveyed and government support needs identified and addressed.

Smart factories will continue to be expanded among member companies requiring carbon reduction, such as traditional manufacturing and root industries, while a help desk for SMEs on safety and environmental issues and support for professional safety managers will be operated concurrently.

Kim Hee-cheon, Director of SME Policy at the Ministry of SMEs and Startups, said, “So far, SME cooperatives have led the improvement of economic status through cooperation and sharing of achievements among SMEs. Over the next three years, we will do our best to support SMEs in preparing proactively for the future through innovation and growth by revitalizing joint projects of SME cooperatives.”

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