SME Industry Conveys 'Field Voices' to Minister of SMEs and Startups... "Standards for Competitive Products Among SMEs Should Be Relaxed"

Korea Federation of SMEs to Hold Meeting with Minister Oh on 24th
Proposes 27 Pending Issues

The small and medium-sized enterprise (SME) sector requested the government to establish criteria for competitive products between SMEs that consider the SME field, relax the industry restriction criteria for confirming prestigious long-established companies, and strengthen the investigation of the actual conditions of the delivery price linkage system.

Minister Oh Young-joo of the Ministry of SMEs and Startups (left) and Kim Ki-moon, President of the Korea Federation of SMEs [Photo by Yonhap News]

On the 24th, the Korea Federation of SMEs held a ‘Meeting with SMEs invited by Oh Young-joo, Minister of SMEs and Startups’ at the Federation of SMEs in Yeouido, Seoul, and proposed 27 pending issues. Ten were discussed on-site, and 17 were submitted in writing. About 30 representatives of SMEs from various industries attended, including Kim Ki-moon of the Federation of SMEs, Kwon Hyuk-hong, Chairman of the Korea Paper Industry Cooperative, and Shim Seung-il, Chairman of the Korea High-Pressure Gas Industry Cooperative Federation.

First, the SME sector requested that the procedure for designating competitive products between SMEs, scheduled to be applied from 2025 to 2027, be prioritized from the SME perspective since the process is underway this year. Competitive products between SMEs are products designated by the Ministry of SMEs and Startups (MSS) to be purchased by public institutions limited to SMEs that directly produce the products.

In 2021, the MSS changed part of the designation procedure to enhance objectivity and fairness in the competitive product designation process, but the SME sector complains about the increased administrative burden. The MSS changed the party responsible for preparing product-specific investigation reports from ‘related organizations or experts’ to ‘professional institutions and experts preparing and reviewing.’ Jang Gyu-jin, Chairman of the Korea Machinery Industry Cooperative Federation, explained, “The expert criteria are ambiguous, and the cost is excessively high when applying for multiple items, which is a heavy burden. Based on the currently designated 212 products, applying a minimum service fee of 10 million KRW per product is expected to cost about 2.12 billion KRW.”

The party responsible for coordination and consultation among stakeholders was also changed from the Federation of SMEs to the MSS’s industry-specific expert committees, but the SME sector is concerned whether the voices from the field will be properly reflected. This is because the MSS keeps the composition status of the committees confidential for fairness. Chairman Jang said, “Participation of the SME sector should be mandatory when forming industry-specific expert committees.”

Minister Oh responded, “We will actively consider institutional improvements, such as establishing procedures to reflect industry opinions.”

The SME sector also expressed the need to relax the industry restriction criteria for confirming prestigious long-established companies. Prestigious long-established companies are SMEs that have operated for a long time, contributed significantly to society, and are expected to grow sustainably. Once confirmed as a prestigious long-established company, they can receive preferential treatment in support projects such as technology development and funding. However, construction, real estate, finance, insurance and pension, and finance and insurance-related service industries are excluded from the confirmation target. Song Chi-young, Chairman of the Korea Industrial Supplies Association, said, “In a situation where the boundaries between industries are disappearing and technological convergence is active due to the Fourth Industrial Revolution, industry restrictions are unreasonable regulations, and the target industries are limited compared to other certifications. The target industries should be expanded to all industries except entertainment and gambling industries.”

There were also calls to strengthen the investigation of the delivery price linkage system and improve the exception clauses. Exceptions to the delivery price linkage system include cases where the delivery price is less than 100 million KRW and cases where the consignor and consignee agree not to link the delivery price. Kim Young-seok, Director of the Seoul Gyeongin Ready-Mixed Concrete Industry Cooperative, said, “Although the delivery price linkage system, a long-standing issue for SMEs, was implemented in October last year, there are no ready-mixed concrete or specialized construction companies (consignees) that have signed delivery price linkage contracts with construction companies (consignors). Consignees are inevitably in a subordinate position in relation to construction companies, making it difficult to respond to unfair demands for non-application of linkage.”

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