'14-Year Wish of SMEs' Delivery Payment Linkage System Introduced... 50 Million KRW Fine for Violations

Passed 'Win-Win Cooperation Act Amendment' in National Assembly Plenary Session on 8th
Defines Major Raw Materials as Over 10% of Supply Payment
Lee Young: "First Step to a New Win-Win Cooperation Trade Culture"

Scene from the National Assembly plenary session on the 8th. Photo by Dongju Yoon doso7@

[Asia Economy Reporter Kim Bo-kyung] The long-awaited delivery price linkage system, a 14-year wish of the small and medium-sized enterprises (SMEs) sector, is becoming a reality. When the prices of major raw materials fluctuate, the delivery payment will be adjusted accordingly, establishing a legal foundation to eliminate unfair trade practices. Until now, SMEs had to bear losses as they could not raise delivery payments even when raw material prices soared.

On the 8th, the National Assembly held a plenary session and passed the amendment to the "Act on Promotion of Mutual Cooperation between Large Enterprises and SMEs (Mutual Cooperation Act)," which mainly introduces the delivery price linkage system.

This amendment is a consolidated bill integrating 11 proposals submitted to the National Assembly. After being sent to the government and approved by the Cabinet meeting, the concept of the linkage system and related support measures will be implemented six months after the date of promulgation. These include the definition of the linkage system, the linkage support headquarters, support for excellent companies, and the standard agreement form.

Matters related to the obligations and sanctions of the linkage system will be enforced nine months after the date of promulgation. This includes the obligation to record linkage items, the obligation to negotiate linkage, prohibition of evasion acts, and fines.

The amendment imposes an obligation on large enterprises and other consignors to include matters related to linkage, such as major raw materials and adjustment requirements, in the agreement form and issue it to the consignee when consigning the manufacture of goods, etc., to the consignee.

[Image source=Yonhap News]

Major raw materials are defined as raw materials whose costs account for 10% or more of the delivery payment. If the consignor abuses its transactional position to avoid this, a fine of up to 50 million KRW will be imposed. The Ministry of SMEs and Startups will establish a standard agreement form regarding delivery price linkage and encourage its use.

However, transactions where the consignor is a small enterprise, the contract period is within 90 days, or the delivery payment is 100 million KRW or less are excluded. It is also excluded if the consignee and consignor agree not to link and have a written agreement.

The Minister of SMEs and Startups may select and reward excellent companies in delivery price linkage to promote the spread of the linkage system. Additionally, a linkage support headquarters may be designated to execute projects such as providing raw material price information, verifying linkage performance, and offering education and consulting.

Minister Lee Young of the Ministry of SMEs and Startups said, "The delivery price linkage system bill is the first law of the Yoon Seok-yeol administration to walk with the vulnerable," adding, "It will be the first step toward a new culture of mutual cooperation where SMEs can receive fair prices."

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