SME Ombudsman to Promote Expansion of Support for Indirect Exporting Small Businesses

Vice Minister Park Jubong: "Indirect Export Proof Issuance Performance Reflected in Win-Win Growth Evaluation"

Ombudsman Park Ju-bong.
[Photo by Small and Medium Business Ombudsman Support Group]

[Asia Economy Reporter Kim Jonghwa] A request has been made to expand the export support policies of the government and local governments, which are currently focused on direct export companies, to include indirect export companies as well. Since the majority of direct export companies are large and medium-sized enterprises, there is a call to increase support opportunities for small and medium-sized enterprises (SMEs) that mainly engage in indirect exports.

The 'Indirect Export System' is a system that recognizes suppliers as having export performance if they supply raw materials or parts required for the export goods of other domestic companies through a domestic letter of credit or purchase confirmation, even if they do not export directly.

Park Joobong, the SME Ombudsman (vice-ministerial level), announced on the 8th that he held an 'S.O.S. Talk (SME meeting)' with the Korea SMEs and Startups Agency Gyeongnam Regional Headquarters at the Changwon Convention Center in Changwon, Gyeongsangnam-do, to listen to companies' requests for regulatory improvements.

This meeting was held targeting SMEs in the Gyeongnam region, with about 20 participants including Ombudsman Park Joobong, Kim Gihan, head of the Ombudsman Support Group, Lee Mija, head of the Korea SMEs and Startups Agency Gyeongnam Regional Headquarters, Park Seongon, head of the Gyeongnam Eastern Branch, and six representatives of SMEs in the Gyeongnam region.

Company A, which attended the meeting, stated, "The support target for export companies under the SME development funds implemented by Gyeongsangnam-do is limited to companies with direct export performance," and requested, "Since indirect export companies, which account for a high proportion of SMEs, are excluded from the fund application targets, it is necessary to expand the support targets."

Currently, most SMEs operate as indirect export companies. The proportion of SMEs in indirect exports reaches about 70%, but the proportion of SMEs in direct exports is only 20%. Most direct export companies are large and medium-sized enterprises. Therefore, if the export-related support system of the government and local governments is focused on direct export companies, the industry points out that SMEs may not properly receive support from policies and systems.

Company A said, "Indirect export companies cannot issue direct export performance certificates, so they can receive benefits equivalent to export companies, such as applying the zero VAT rate and utilizing export support systems, through purchase confirmation certificates proving domestic procurement of export goods," adding, "The problem is that purchasing companies (direct export companies), which are mainly large and medium-sized enterprises, have little incentive to issue purchase confirmation certificates." They further requested, "To facilitate indirect export verification, please prepare incentives and inducements so that purchasing companies voluntarily participate in issuing purchase confirmation certificates."

In response, Ombudsman Park Joobong said, "I agree on the need to support indirect export companies, which have a high proportion of SMEs," and explained, "As a result of consultations, we received a response from Gyeongsangnam-do that they will review improvements to the export support system." He added, "To facilitate the issuance of export verification for SMEs, we discussed reflecting the issuance performance of purchase confirmation certificates in the Win-Win Growth Index evaluation involving the Win-Win Growth Committee, and received positive feedback."

The Win-Win Growth Committee plans to consider reflecting the issuance performance of purchase confirmation certificates by large and medium-sized enterprises in the 'Win-Win Growth Comprehensive Evaluation' indicators and decide by the end of the year, taking into account fairness by industry.

Also, Company B, which operates a measurement agency business, stated, "There is an obligation to register with local governments, but when the laboratory location changes, the existing registration must be canceled and a new registration must be made with the local government where it is relocated," and requested, "Although only the location changes, the periodic verification and evaluation procedure called 'quality control,' which takes a long time, must be undergone again, causing disruption to normal business activities, so please ease the related procedures."

Regarding this, the Ministry of Environment, the relevant department, stated that if all conditions such as technical personnel, facilities, and equipment remain the same and only the location (registrar) changes, they plan to revise regulations to allow new registration without returning the quality control verification certificate.

In addition, SMEs attending the meeting made prior requests on agenda items such as ▲improving application conditions for smart factory dissemination and expansion support projects ▲establishing special funds to strengthen competitiveness in the nuclear power industry ▲building and operating a comprehensive management system to promote venture investment, and received positive responses from the relevant administrative agencies.

Ombudsman Park said, "In this difficult economic situation where production, consumption, and investment are all declining, I will do my best to listen carefully to the voices from the field in the Gyeongnam region and help SMEs overcome the crisis and strengthen competitiveness through regulatory improvements."

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