Enhancing Effectiveness of 11.9 Trillion KRW SME Public Procurement... Expanding Opportunities for New Product Participation

Reducing Burden on Small and Medium Enterprises Participation
Promoting Localization of Core Components

The government has decided to implement measures such as easing the participation burden on small and medium-sized enterprises (SMEs), expanding opportunities for new products to enter the public procurement market, and encouraging the use of domestically produced core components to enhance the effectiveness of public procurement of SME products.

Participants from small and medium-sized enterprises attending the '2018 Public Procurement Promotion Conference' are consulting with public institution officials about the pilot purchase system for technology development products. Photo by Jinhyung Kang aymsdream@

On the 5th, the Ministry of SMEs and Startups announced the "Measures to Enhance the Effectiveness of Public Procurement of SME Products" at the 'Emergency Economic Ministers' Meeting and Price-related Ministers' Meeting' chaired by the Deputy Prime Minister for Economy. The government operates various systems, including mandatory purchase of at least 50% SME products, to secure stable sales channels for SMEs, and public institutions purchase approximately KRW 119 trillion worth of SME products.

First, the government will reduce the participation burden on SMEs. For SMEs that have obtained statutory certifications such as the Hazard Analysis and Critical Control Points (HACCP), the standards will be revised to allow them to omit the on-site verification process essential for participation in the SME-only competitive market.

Until now, SMEs delivered SME-only competitive products to public institutions, and separate investigations were conducted by the Ministry of SMEs and Startups and public institutions. From now on, similar post-management investigations will be conducted jointly by the institutions. Additionally, in the SME-only competitive system, penalties for the same violation by an SME will be reduced by the period of participation restriction imposed by one institution.

Large enterprises and overseas products will be excluded from the purchase performance of SME products by public institutions. Currently, an investigation is underway on the purchase status of large enterprise and overseas products by 'distribution companies' targeting 856 public institutions that have submitted SME product purchase performance data by this month. Along with this, the government is also considering revising the "Act on Promotion of Purchase of SME Products and Support for Sales Channels" to recognize future public institution SME product purchase performance only for products produced by SMEs.

Opportunities for new products to participate in the public procurement market will be expanded. Previously, SME-only competitive products designated every three years could only be recommended by the Korea Federation of SMEs, but the number of organizations that can recommend new products will increase to seven, including the Korea Federation of SMEs Convergence.

Furthermore, the government plans to actively encourage public institutions to purchase new products by supporting verification of SME technology development products on-site at public institutions.

Products purchased by public institutions will be encouraged to use domestic components to support SMEs in becoming competitive. Among SME-only competitive products with a high proportion of imported core components, products that can use domestic components will be selected and publicly announced as targets for localization. Participating SMEs will be awarded additional points during bidding or through the SME product performance certification system.

Minister Lee Young of the Ministry of SMEs and Startups stated, "We will ease the participation burden on SMEs in the public procurement market, expand market participation for SMEs with new products, and guide SMEs highly dependent on procurement to enter the civilian market. In particular, we will revise some outdated direct production standards for SME-only competitive products to keep pace with changes in the economic environment."

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