Despite Soaring Raw Material Prices, SMEs Fail to Get Fair Prices... "Legislation on Delivery Price Linkage System Must Be Enacted Quickly"

[Asia Economy Reporter Kwak Min-jae] The Korea Federation of Small and Medium Business (KSMBA) announced on the 9th that it held the ‘2022 1st Large and Small-Medium Enterprise Delivery Price Adjustment Committee’ at the KSMBA headquarters in Yeouido, Seoul.

The Delivery Price Adjustment Committee is composed of 15 members, including representatives from seven industries (root manufacturing, food, chemical, paper, distribution, IT, construction) and public interest commissioners, to support fair payment for small and medium enterprises (SMEs) and to activate the adjustment consultation system.

At the committee meeting, there was a presentation on the ‘Government’s Policy Direction on Fair Payment for Delivery Prices’ and a discussion on the direction and plans for the fair payment project. About 10 people attended, including co-chairman Lawyer Kim Nam-geun, Yang Tae-seok, Chairman of the Gyeongin Casting Industrial Complex Business Cooperative, Hwang Cheong-seong, Chairman of the Korea Box Industry Cooperative, and Lee Jeong-heon, Director of the Korea Institute of Certified Public Accountants.

No Hyung-seok, Director of the Transaction Environment Improvement Division at the Ministry of SMEs and Startups and the keynote speaker, said, “Given the difficult times for SMEs both domestically and internationally, there is consensus on the necessity of the delivery price linkage system. The Ministry of SMEs and Startups is considering various measures, including the inclusion of linkage clauses in the standard contract and pilot operation of the linkage system centered on large enterprises.”

Industry participants pointed out that despite various policy efforts by the government, such as the introduction of the adjustment consultation system, SMEs still bear the cost whenever raw material prices surge. They unanimously agreed on the need to introduce a delivery price linkage system so that delivery prices automatically reflect the increase in raw material costs.

Kim Nam-geun, Chairman of the Delivery Price Adjustment Committee, said, “Since both ruling and opposition parties recently declared that legislating the delivery price linkage system is a top priority, much effort is needed to develop response logic and detailed implementation plans to ensure the system, a long-standing demand of the SME sector, is implemented.”

Yang Chan-hoe, Head of the Innovation Growth Headquarters at KSMBA, stated, “Due to the recent Ukraine crisis and global supply chain disruptions, raw material prices have been soaring daily, but most SMEs have not been able to reflect these price increases in delivery prices, worsening their management difficulties. KSMBA plans to promote the introduction of the delivery price linkage system and, together with cooperatives, identify delivery price difficulties and unfair damages by industry to pursue multifaceted responses.”

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