Government to Support SMEs Focusing on "Innovation, Regional Prioritization, and Fairness"

Government Announces SME Policy Directions
"Dialogue with Small and Medium-sized Business Owners" Held at the Blue House

The government has announced plans to foster a foundation for the growth of small and medium-sized enterprises (SMEs) by incorporating the values of "innovation-driven growth," "regional prioritization," and "collaborative partnership between large and small firms" into its SME policies.

On March 20, the Ministry of SMEs and Startups, the Ministry of Employment and Labor, and the Fair Trade Commission unveiled the new "Policy Directions for SMEs Based on Innovation, Regional, and Fairness Perspectives" at the Blue House State Guest House. The event, titled "Dialogue with Small and Medium-sized Business Owners," was attended by more than 170 participants, including officials from related ministries, SME representatives and employees, and experts.

This roundtable aimed to introduce the government’s SME-related policies to the public and to gather on-the-ground feedback. Prior to a public forum, the Ministry of SMEs and Startups presented its "Policy Direction for Innovation-driven Growth of SMEs." The Ministry of Employment and Labor followed with a presentation on "Balanced Regional Growth through Local Talent Development," while the Fair Trade Commission detailed its approach to "Creating a Fair Market Environment for Joint Growth."

President Lee Jae-myung is speaking at a dialogue with small and medium-sized business owners held on the 20th at the Blue House State Guest House. Photo by Yonhap News Agency

To strengthen the full-cycle competitiveness of SMEs—from research and development (R&D), to production, to sales—the Ministry of SMEs and Startups has devised measures to turn laboratory technologies into market revenue. As part of these efforts, the scale of TIPS (Tech Incubator Program for Startups), in which the private sector selects candidates and the government provides support, will be doubled. Specialized R&D in emerging sectors such as artificial intelligence (AI), biotechnology, defense, and climate technology will also be expanded. Additionally, a Korean-style SME technology commercialization program (STTR) will be launched to ensure that market considerations are addressed from the early technology development stage. The government will also improve the public procurement system so that it can act as the first buyer of innovative technologies.

To help SMEs achieve better process management and business outcomes through smart factory adoption, support mechanisms will be improved, and partnerships will be formed by sector—such as K-beauty and food—thereby nurturing a smart factory ecosystem. To open up overseas markets, the government will assist domestic firms with export market research and provide incentives and financing support for those transitioning to export. Tailored export support programs will be offered by sector, including for K-beauty and online/tech services. The government will also consider applying the principle of regional prioritization across all SME policies, for example, by expanding the proportion of regional support and differentiating support limits and government funding by region. Plans include the introduction of a cooperative finance index for six major commercial banks, incorporating online platforms into the co-prosperity growth index, and promoting cooperation between large and small firms in defense, nuclear power, and climate sectors to foster a structure of joint growth between large corporations and SMEs.

Balanced Regional Growth through Local Talent Development

Policies to promote balanced regional growth by fostering local talent are also being pursued. The goal is to establish a virtuous cycle in which local talent is trained, employed, and retained by local businesses by enhancing support for region-specialized SME workforce, promoting SME employment in the regions, and strengthening policy infrastructure. To achieve this, regional forums—such as regional human resource development committees and regional labor-management-government councils—will conduct surveys on workforce and training needs to expand the training of advanced talent, including in AI, tailored to the needs of local businesses. An AI joint training center will be established so regional SMEs can access training facilities and programs at large corporations and regional hub universities. For SMEs that find it difficult to visit training institutions, 600 career development consultants will support competency development, including in AI, for 22,000 SMEs. Long-term employment will be encouraged by supporting master’s degree programs for core talent who have worked at regional SMEs for at least three years.

To help local talent settle in the regions, the government will expand preferential support for non-metropolitan areas, not only through youth job creation incentives and training allowances, but also across all major support programs of the Ministry of Employment and Labor. Measures will also be implemented to make regional SMEs safer workplaces, including supporting region-specific major accident prevention infrastructure in cooperation with local governments and utilizing industrial safety professionals to assist with SME workplace safety and health management. Dedicated teams will be established at local employment and labor offices nationwide to facilitate dialogue and cooperation between primary contractors and subcontractors, and field support for joint bargaining consultations will be provided. Starting in April, a new system will allow the government to provide up to 2 billion won per year when a primary contractor contributes at least 3 billion won to a joint employee welfare fund established by SME partners, in order to improve worker welfare for partner company employees.

To establish the principle of local governments leading job policies with central government support, the enactment of the "Local Employment Revitalization Act" is planned for the first half of this year. A collaborative system between central and local governments will also be set up to prepare comprehensive support measures for local SMEs, including workforce training, industrial safety, housing, culture, and asset formation.

Creating a Fair Market Environment

The Fair Trade Commission has announced plans to eradicate unfair practices by large companies that exploit bargaining power gaps and trading positions over SMEs, thereby establishing an inclusive market order where co-prosperity and joint growth prevail. To this end, the government will consider exempting collective bargaining by SMEs and small business owners with large companies from cartel regulations, thereby activating group negotiations. In the franchise sector, a franchisee association registration system will be introduced, and consultation with registered franchisee associations will be made mandatory, thereby strengthening the right to request consultations for franchisees. Subcontractors and agency owners will be granted the right to form associations, thereby enhancing bargaining power over transaction terms.

Measures to protect SME technology—a key source of bargaining power—and expand relief for damages are also underway. These include deploying technology protection monitors to uncover hidden damages, expanding ex officio investigations in sectors prone to frequent violations, and establishing a pan-government response and cooperation system, all to strengthen monitoring against technology theft. In addition, the government will bolster SMEs' technology protection capabilities through the operation of on-site technology theft counseling centers and customized consulting. Unfair practices such as late or non-payment, cost shifting, and unfair special contract terms in subcontracting, franchising, and distribution will be closely monitored, and violations will be strictly sanctioned. The maximum cap on fixed fines will be raised up to tenfold, and penalties for repeat offenders will be increased. By operating an anonymous reporting center and raising the reward amount and expanding the scope of eligible recipients, the likelihood of detecting unfair practices will also be increased.

Han Seongsook, Minister of SMEs and Startups, stated, "SME policy is only complete when voices from the field are included. We will focus our policy capabilities to ensure that SMEs, which make up 99% of Korean companies, can leap forward through innovation, regional prioritization, and fairness."

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