[The Editors' Verdict] Government Reorganization Must Not Become a Crisis for SMEs

Kim Min-jin, Head of the Ministry of SMEs and Startups

The unease within the small and medium-sized enterprises (SME) sector has been escalating since the formation of the Presidential Transition Committee. The committee was finalized ten days ago, yet SME experts were scarcely found. There was only one active government official dispatched from the Ministry of SMEs and Startups (MSS).

The SME community was disappointed and concerned by the absence of someone to explain SME policy issues and design the blueprint. However, they hesitated to voice their concerns openly, fearing to stir up trouble. One major worry was the potential dismantling or division of the MSS.

The friction with the Ministry of Trade, Industry and Energy (MOTIE) is not a recent development. Rumors have circulated within government circles and beyond. Since the ministry’s establishment, discussions about its dissolution have arisen like smoke after four years and nine months. President-elect Yoon Suk-yeol stated, "We must carefully select and carry forward the things the current administration has done well." However, some were more sensitive to the phrase "carefully select" than to "carry forward."

The MSS originated from the Small and Medium Business Division of the Ministry of Commerce and Industry (now MOTIE). It evolved through the Small and Medium Business Bureau and was established as an external agency under the Ministry of Industry and Resources in 1996. Its elevation to a ministerial-level central ministry was realized with the inauguration of the Moon Jae-in administration in 2017. Although there were signs during the Lee Myung-bak and Park Geun-hye administrations, those were premature.

In the 1960s and 70s, Korea’s industrial base was weak, and there were few companies. Since then, South Korea has grown into a strong manufacturing nation, achieving remarkable industrialization. The establishment of the SME ministry was partly a result of industrial scale expansion but also signified an intention to empower SME policies equally alongside large corporations. The goal was to strengthen the corporate structure that had grown centered on large enterprises and industry, and to effectively nurture SMEs and venture companies.

Thanks to the ministry’s elevation, it gained legislative proposal rights, budget authority, and administrative coordination power. Policy formulation and budget allocation accelerated, enabling proactive execution. Although the ministry’s slogans have changed with administrations?from win-win growth to creative economy to mutual cooperation?SMEs now account for 99% of all companies and 83% of employment.

The potential dismantling or restructuring of the MSS has been overshadowed by discussions about abolishing the Ministry of Gender Equality and Family, and restructuring the MOTIE, Ministry of Education, and Ministry of Science and ICT. However, these discussions are interconnected. Speculative rumors have spread that the SME sector might be transferred to MOTIE, ventures and startups split off to the Ministry of Science and ICT, and small merchants assigned to a separate agency.

The likelihood of the MSS being dismantled is low. The recurring power struggles every season are uncomfortable and exhausting. They are bothersome. As the organization grows and times change, it is natural to change or adjust its structure. Restructuring aimed at improving performance is welcome, and if it is the right path and solution, there is no reason to worry.

Those in the know understand this. Even the terminology used to describe government reorganization reflects this. If the essence disappears and there is no justification, it becomes a turf war and retaliation.

Businesses are pinning their hopes on regulatory easing under the next administration. Key pledges of President-elect Yoon include introducing a delivery price linkage system, establishing a presidential-level win-win committee, and enacting a Special Act on SME Productivity (tentative name) to proactively address the widening gap between large corporations and SMEs. These pledges have mobilized many SMEs and small merchants.

Now is not the time to split, tear apart, or divide. Instead of recklessly allocating huge budgets and then lavishly distributing funds during election seasons, it is time to prepare a new SME policy paradigm that the current government could not achieve.

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