Government to Streamline 232 SME Support Projects, Save KRW 4 Trillion and Reinvest in Strategic Sectors

Announcement of Efficiency Improvement Measures for SME Support Projects Across All Ministries
Strengthening Support for National Security, Pharmaceutical Biotechnology, Climate Technology, and K-Consumer Goods

The government will streamline 232 SME support projects administered by 17 ministries. This will be achieved through the consolidation and elimination of similar and overlapping projects, moving away from small-scale and grant-splitting support, and restructuring low-performing or conventional programs. The resulting budget savings, totaling KRW 4 trillion, will be reinvested into strategic sectors.

On August 27, the Ministry of SMEs and Startups and other related ministries announced the "Efficiency Improvement Plan for SME Support Projects across All Ministries" and the "Plan to Foster Innovative Companies in New Growth Sectors" at the Fiscal Operation Strategy Council. As of this year, 22 ministries operate SME support projects, totaling 671 programs with a combined budget of KRW 31 trillion. However, criticism has been raised that the maintenance of some similar or overlapping projects has led to inefficient use of the budget. In response, the government prepared efficiency improvement measures targeting 472 projects under 17 ministries, with a total budget of KRW 25.5 trillion.

No Yong-seok, Acting Minister and First Vice Minister of the Ministry of SMEs and Startups, is discussing the 'Efficiency Improvement Plan for SME Support Projects Across All Ministries' and the 'Nurturing Plan for Innovative Companies in New Growth Sectors' at the 'Fiscal Management Strategy Council' held on the 27th at the Korea Deposit Insurance Corporation in Jung-gu, Seoul. Ministry of SMEs and Startups

Streamlining 232 Projects to Save KRW 4 Trillion

Of the 472 target projects, the government will streamline 232, which represents about half. This includes consolidating or abolishing 88 projects and reducing the budget of 144 projects, for a total budget cut of KRW 4 trillion. First, similar and overlapping projects will be consolidated. Support areas with overlapping content will be merged, and when multiple projects have identical purposes and targets, they will be unified into a single project. Through this, the number of projects will be reduced by 19, saving KRW 2.4 trillion.

Support methods that focus on small-scale or split grants will be phased out. For projects with a budget under KRW 5 billion, the number of projects will be reduced by 53 through consolidation, resulting in KRW 130.9 billion in savings. For grant-type projects providing less than KRW 50 million per company, 12 will be abolished and 32 reduced, yielding savings of KRW 276 billion. Low-performing and conventional projects will also be adjusted. Among 83 projects evaluated as underperforming in the "SME Support Project Performance Review" conducted from 2023 through this year, 13 will be abolished and 31 will have their budgets reduced, saving KRW 481.9 billion. Additionally, projects that have become unnecessary due to goal attainment or changes in economic conditions will be discontinued, with 18 abolished and 35 reduced, for an additional savings of KRW 845.2 billion.

The KRW 4 trillion saved will be reinvested into high-performing and core projects related to SME support. This does not mean reducing SME support itself, but reallocating unnecessary expenditure to areas where it is most needed. For example, the Ministry of SMEs and Startups plans to expand its JUMP-UP program, which supports promising SMEs for three years, into a three-stage program, increasing the related budget from KRW 59.5 billion this year to KRW 164.2 billion next year.

The Ministry also intends to overhaul the SME support system to focus on "growth acceleration and outcomes" going forward. Under the new framework, companies will be selected for support based on their growth potential—such as increases in sales or employment—and AI-based assessments of potential for future growth, to ensure that resources are focused on the most promising enterprises.

Promoting Innovation in New Growth Sectors

The Ministry of SMEs and Startups, together with associated ministries, will foster innovative enterprises in new growth sectors, including national security, pharmaceutical biotechnology, climate technology, and K-consumer goods. To achieve this, a comprehensive collaboration platform will be established with relevant ministries such as the Ministry of Strategy and Finance, Ministry of National Defense, Defense Acquisition Program Administration, Ministry of Health and Welfare, Ministry of Climate, Energy and Environment, and the Ministry of Culture, Sports and Tourism. Starting next year, the government plans to jointly identify 300 innovative companies annually. Each selected company will receive specialized consulting and a comprehensive set of policies vital for growth—including business development, finance, exports, staffing, and R&D—for up to five years and totaling at least KRW 10 billion. The key feature of this support model is the provision of support for an initial two-year period, after which the achievement of stage-specific goals will be assessed to determine eligibility for an additional three years of support. To enable this aggressive bundled support, the Ministry of Strategy and Finance and the Ministry of SMEs and Startups have included a KRW 238.8 billion budget for this project in the government’s 2027 plan.

Following the "Direction for Fostering Innovative Enterprises in Future National Security," which was announced in June, the Ministry and related agencies will prepare and sequentially announce measures for the pharmaceutical biotechnology, climate technology, and K-consumer goods sectors by October. Noh Yongseok, First Vice Minister of the Ministry of SMEs and Startups, stated, "We will ensure that the budget for SME support—sourced from taxpayers—is used efficiently for those who truly need it. We are committed to shifting the SME policy paradigm in new growth sectors and delivering tangible results that will lead the global market."

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