SME Sector Welcomes Exclusion of Yellow Umbrella from Government Advertisement Act

The Korea Federation of SMEs announced on the 24th that it expects a positive parliamentary review of the recently proposed “Partial Amendment to the Small and Medium Enterprise Cooperative Act,” and hopes for its passage to ensure the efficient operation of the Yellow Umbrella, a social safety net for small business owners.

On the 22nd, Assemblywoman Kim Donga, a member of the National Assembly’s Trade, Industry, Energy, SMEs, and Startups Committee, sponsored the partial amendment to the Small and Medium Enterprise Cooperative Act. The amendment excludes the Yellow Umbrella project from the application of the “Act on Advertisement by Government Agencies and Public Corporations (Government Advertisement Act).”

The Yellow Umbrella is a lump-sum savings program operated by the Korea Federation of SMEs since 2007, designed to help small businesses and self-employed individuals overcome business crises such as closure or old age. The Federation has worked with the government and the National Assembly to expand subscriber benefits, including up to 6 million won in income tax deductions, and the cumulative number of subscribers currently stands at approximately 3.16 million.

The Government Advertisement Act applies to national agencies, local governments, public institutions, and corporations established under special laws. As of 2023, there are about 3,600 corporations established under special laws. When these entities engage in paid advertisements or public notices through domestic or international media, they are required to commission the Korea Press Foundation, which is entrusted by the government, and the foundation charges a 10% commission fee.

Under this law, the Korea Federation of SMEs, established under the Small and Medium Enterprise Cooperative Act, is also subject to these regulations. However, unlike national and public institutions, the Yellow Umbrella project is operated solely with private funds and without government subsidies. If its autonomy in selecting media agencies is restricted and commission fees are imposed, this could lead to increased business costs and potential losses for subscribers.

The Korea Federation of SMEs carries out strategic advertising and promotional activities through professional agencies. With the goal of enhancing brand awareness and expanding membership, it conducts competitive bidding to select agencies capable of efficiently handling everything from ad production to execution within a limited budget, with a panel of academic and industry experts serving as evaluators.

Lee Changho, head of the Mutual Aid Business Division at the Korea Federation of SMEs, stated, “The fact that the cumulative number of Yellow Umbrella subscribers has reached 3.16 million demonstrates that promotional activities are proceeding smoothly for this privately operated social safety net.” He added, “We will continue to do our best to discover new projects that can more efficiently inform small business owners and self-employed subscribers about the system and provide them with greater benefits.”

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