"Will Exchange Losses Be Compensated?" "Difficult to Pioneer Alternative Markets" Appeals from Exporting SMEs (Comprehensive)

Emergency Response TF Meeting for SMEs Held
75% of Exporting SMEs "Already Suffered Damage"
Logistics Voucher: 14 Million KRW National Subsidy per Company

Kang Sung-cheon, Vice Minister of the Ministry of SMEs and Startups, is presiding over the "Emergency Response TF Meeting for SMEs Sector Regarding the Ukraine Situation" at the Seoul Regional Headquarters of the Korea SMEs and Startups Agency on the 18th.

[Asia Economy Reporter Kim Bo-kyung] "Our company has a 30% export share to Russia. Even if we receive payment, with the ruble plummeting day by day, can the government compensate for the foreign exchange losses?" (Son Hyun-woo, Director of Yada)

"If a grace period had been given when the sanctions against Russia were announced, the damage would have been reduced. After the sudden announcement of sanctions, we did not have time to secure." (Cho Hee-je, CEO of Geumyu Industry)

It was surveyed that 75% of our SMEs exporting to Russia, Ukraine, and other countries have recently suffered damage due to a series of incidents. The affected companies met with the ministries in charge of SMEs to voice their on-site difficulties. The government prepared additional measures such as establishing programs to reduce companies' logistics costs and support the discovery of alternative export destinations.

On the 18th, the Ministry of SMEs and Startups held an 'Emergency Response TF for the SME Sector' meeting and a company roundtable at the Seoul Regional Headquarters of the Korea SMEs and Startups Agency in Geumcheon-gu, Seoul. Attendees included Kang Sung-cheon, Vice Minister of the Ministry of SMEs and Startups and TF chairman, as well as officials from the Korea SMEs and Startups Agency, Korea Technology Finance Corporation, and Korea Federation of SMEs.

SMEs Exporting to Russia Voice On-site Difficulties... 75% Report Damage

The recent Ukraine situation has prolonged impacts on commodity trade, financial markets, and raw material prices due to the ongoing stalemate. Exporting SMEs are facing significant difficulties such as delayed payments, logistics vessel turnarounds, and disruptions in new contracts due to strengthened export controls against Russia.

SMEs attending the roundtable unanimously voiced their on-site difficulties. Son Hyun-woo, director of Yada, which exports cosmetics to Russia, said, "We have been producing and packaging for Russian exports since early this year, but the export route has been blocked," adding, "Because the sales share in Russia is high, even commercial banks are reluctant to provide loans."

In response, Vice Minister Kang said, "There is a way to utilize the Korea SMEs and Startups Agency's emergency management stabilization funds and the Korea Technology Finance Corporation's special guarantees," adding, "We will consider how to handle the losses already incurred by companies. For now, we will respond by indirectly supporting liquidity."

Geumyu Industry exports construction heavy equipment parts, with 20% of its sales from exports to Russia. CEO Cho Hee-je lamented, "We do not know how long this situation will last, and it is difficult to develop alternative markets." Vice Minister Kang emphasized, "If it is necessary to open alternative markets, we will support you as much as possible."

Han Jung-su, CEO of Microdigital, pointed out the issue of domestic insurance companies being reluctant to provide cargo transport insurance for Russia, and Vice Minister Kang responded, "We will check the situation of domestic insurance companies through financial authorities."

On this day, the TF announced the results of a proactive damage survey targeting SMEs expected to be affected by the Ukraine situation.

The survey was conducted from the 3rd to the 14th of this month, targeting 1,019 companies that had ① export amounts of over $100,000 to Russia, Ukraine, and Belarus as of last year and ② an export share of 30% or more to these three countries.

The survey results showed that 75.0% of respondent companies answered that they "have already suffered damage." The impact of this situation on the SME sector is becoming visible. Their main difficulties were payment delays (46.0%), logistics difficulties (29.3%), and suspension of export contracts (25.7%).

Additionally, most affected companies are struggling to find alternative trading partners, and the most needed support policies were logistics cost support (31.2%), new funding supply (30.1%), maturity extension (23.2%), and information provision (21.4%), in that order.

Export Marketing Support Measures Announced: "Minimizing Damage Response"

On the 14th, the Ministry of SMEs and Startups launched a 200 billion KRW emergency management stabilization fund through the Korea SMEs and Startups Agency, and on the 15th, special guarantee support through the Korea Technology Finance Corporation began. Following financial support measures, additional support plans in the export marketing sector were announced on this day.

A dedicated logistics voucher track will be established for companies that have suffered damage such as return logistics costs, demurrage charges, and storage fees due to vessel turnarounds and port berthing, with up to 14 million KRW in national funding support per company.

Programs to support the discovery of alternative export destinations will also be newly established in large numbers. An exclusive export voucher track will be prepared to support marketing, promotion, and exhibition participation as a package, providing up to 30 million KRW per company.

Additionally, a one-on-one trade expert matching program will be conducted for 100 companies. Applications for entry into global online shopping malls will also begin in early next month.

Vice Minister Kang said, "The anxiety and difficulties of companies due to the Ukraine situation are immeasurable, so the government will take meticulous measures to minimize damage to SMEs, keeping all possibilities in mind."

He added, "I also urge related organizations such as the Korea SMEs and Startups Agency to ensure that the export marketing programs announced today are delivered to the field as soon as possible and that execution is thorough."

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