On February 8, the government held the 10th Government Policy Debate Forum under the theme of "SMEs and Microenterprises Moving Forward Together for the Economy and People's Livelihood."

This year, the government policy debate forum had a new format. Instead of the traditional method of government ministries explaining policies, the discussion was organized as a forum where participants could ask questions directly to the government and receive responses to solve problems.

The theme of the government policy debate forum was "SMEs and Microenterprises Moving Forward Together for the Economy and People's Livelihood." The private sector and representatives from relevant ministries participated in the discussion. There, the government presented three detailed measures to realize an economy centered on the people's livelihood, in which microenterprises, small and medium-sized enterprises, and startups move forward together. The three measures are as follows.

 ➊ Burdens that we reduce together
 ➋ Environments that we create together
 ➌ Futures that we grow together
 

➀ Burdens that we reduce together

The government will work to reduce the burdens of microenterprises and self-employed individuals by providing financial support for electricity bills and interest expenses, recovering businesses of traditional markets, and expanding safety nets for those on the brink of going out of business.

Ⓐ Reduction of Cost Burdens

1.  The government will reduce the burden of 1.26 million micro-enterprises and self-employed individuals for electricity by providing special financial support for electricity bills of up to KRW 200,000.

Small microenterprises with annual sales of KRW 30 million or less will be eligible for a discount up to KRW 200,000 per business to cover their electricity bills. The applications will be accepted starting February 21, and the electricity bill discounts will be applied from early March. Moreover, the government will also provide up to 40% of the cost of buying or replacing air conditioners, heaters, refrigerators, and other appliances with high-efficiency equipment.

2. The government is planning to ease the financial burdens of microenterprises and self-employed individuals by offering a low-interest refinancing program to 15,000 people. Furthermore, the government will refund interest paid to banks and small and medium-sized financial institutions to 2.28 million people to ease the financial burden.

The government will offer a refinancing program for microenterprises with middle-to-low credit who borrowed money with a high-interest rate of 7% or more. These microenterprises will be able to switch to low-interest rate products of 4.5% with long-term installments of up to 10 years, starting February 26. In addition, vulnerable microenterprises will get refunds for the interest paid to small and medium-sized financial institutions like savings banks and mutual finance up to KRW 1.5 million from March 29. Interest paid to commercial banks has already started to be refunded starting February 5.

3. The government will create KRW 1 trillion of new financial resources for the Regional Credit Guarantees Foundation and provide KRW 3.7 trillion through policy funds to support stable financing for 14.2 million microenterprises and self-employed individuals.

The legal contribution rate of banks towards regional credit guarantees will be raised from 0.04% to 0.07%. This increase will facilitate new guarantees worth KRW 1 trillion in the second half of 2024, benefiting 32,000 microenterprises. Additionally, policy funds amounting to KRW 3.7 trillion will be provided to 110,000 vulnerable microenterprises.

4. The government will increase the threshold for individuals to be registered as simplified taxable persons for value-added tax from KRW 80 million to KRW 140 million.

To reduce the tax burden on microenterprises and self-employed individuals, the threshold for registering as simplified taxable persons for value-added tax has been increased. Previously, the threshold was set at 80 million KRW for those with annual sales. Now, it has been raised to 140 million KRW. This change is expected to benefit around 140,000 microenterprises and self-employed individuals.

 Ⓑ Recovering businesses of traditional markets

1.  The government will boost businesses in traditional markets, strengthen their capabilities, and work to improve their environment by issuing KRW 5 trillion in Onnuri gift certificates, launching a tour program to excellent markets overseas, and improving traditional market facilities.

The government will increase the issuance of Onnuri gift certificates by KRW 1 trillion to KRW 5 trillion. Furthermore, the number of stores affiliated with Onnuri gift certificates will be increased to 250,000 by adding new shopping districts. In order to attract younger consumers, traditional markets with a history and culture of over 100 years will be rebranded. Tour programs will also be provided to merchants to learn from the best markets abroad. The environment surrounding traditional markets will be improved by constructing parking lots, renovating old facilities, and reinforcing fire prevention inspections to ensure the safety of the markets.

2. The government plans to allocate up to KRW 10 billion to rejuvenate struggling regional commercial districts in partnership with local governments and private entities. The plan includes piloting a commercial district planner system and creating local commercial district brands.

The government will cooperate with the private sector and local governments to revitalize the stagnant local commercial districts. New policies will be put in place, including the implementation of a commercial district planner system and a commercial district development fund to achieve this. This will help discover local commercial districts and allow for the planning and implementation of effective development strategies. To help finance this initiative, the government will provide up to KRW 10 billion. This financial support will be used to develop commercial district brands and create base spaces. Local governments will have the autonomy to choose and manage these brands and base spaces in accordance with local characteristics.

Examples of private commercial district planners taking center stage to revitalize local commercial districts include:

- (Company U) A commercial district planner transformed an abandoned glass factory into a cultural space. Now, the place has become the Yeonhee and Yeonnam commercial districts, which are popular among young people.
- (Company J) A planner revitalized Gunsan's Younghwa market by connecting empty stores to young merchants, creating Younghwa town. Younghwa market was previously a place few people visited.

Ⓒ Easing the burden of going out of business

1. The government will simplify the application process for unemployment insurance and cover up to 80% of the insurance amount. This initiative will strengthen the social safety net for self-employed individuals, enabling them to prepare for any crisis related to their business.

The government has announced that it will now provide support for up to 80% of the self-employment insurance premiums paid by self-employed individuals. This is an increase from the previous support level of 50%. The support is intended to help self-employed individuals receive unemployment benefits in case their business has to close down. Additionally, the employment insurance enrollment system will be reorganized in the first half of the year to provide a one-stop application process for streamlined employment insurance enrollment and premium support.

2. The government will reform the system to facilitate for returning payments to the Yellow Umbrella Multi-aid Fund and make simplified rehabilitation procedures easier.

The government is taking steps to improve the system for returning payments to the Yellow Umbrella Multi-aid Fund and to make simplified rehabilitation procedures easier for businesses in crisis. The Yellow Umbrella Multi-aid Fund, which is intended to support microenterprises, was previously only available in the event of business closure or the death of business owners. However, the program is now being expanded to include cases involving disasters, illnesses, and bankruptcy. To further ease the tax burden, the existing tax base for the deduction, which was levied as other income, will be changed to retirement income. Additionally, the Debtor Rehabilitation and Bankruptcy Act is expected to be amended by the first half of 2024 to facilitate simplified rehabilitation procedures for small business income earners. Small business income earners indicate debt-burdened business income earners with rehabilitation claims and rehabilitation security rights totaling KRW 5 billion or less at the time of filing for rehabilitation.
 

➁ Environments that we create together

The government plans to eliminate regulatory barriers that impede the business and management activities of microenterprises, self-employed individuals, and SMEs. The aim is to create an environment where large corporations, SMEs, and microenterprises can cooperate and grow together.

Ⓐ Creating a favorable environment for doing businesses

1. The government plans to reform regulations to protect self-employed individuals. It will also improve the visa system to address labor shortages in SMEs and micro-enterprises.

The enforcement decrees of three relevant laws - the Youth Protection Act, Food Sanitation Act, and Tobacco Business Act - will be revised to protect innocent microenterprises and self-employed individuals from young people purchasing alcohol and tobacco by lying about their age. In cases where business owners have proof that they verified the minor purchasers' identification or have been assaulted or threatened by them, business owners will be exempt from administrative penalties for selling alcohol and tobacco to minors. Additionally, the current excessive business suspension standards will be improved.
The government will launch a talent-matching program for Korean SMEs that are facing severe labor shortages, bringing overseas SW workers from India and Vietnam. MSS will try to expand the E-9 visa for non-professional foreign workers. The objective is to introduce 165,000 foreign workers this year, bringing them to the restaurant, hotel, and condominium industries on a pilot basis, in addition to the placements already taking place in the manufacturing industry.

2. The government will enhance inter-ministerial cooperation to eliminate technology theft and support fair recovery from damages.

A new service called the Core Technology Copying Alert Service will be created to safeguard the technology of innovative startups. The main aim of this service is to prevent technology theft and increase the liability for compensation by up to five times to ensure effective damage relief. In addition, the government will be introducing the Fair Trade Dispute Mediation Act to provide better support for microenterprises and SMEs in resolving any disputes related to their rights. The Fair Transactions in Subcontracting Act will also be amended to enable dispute mediation, even in cases where corrective actions have already been taken to address violations of the Act. The Core Technology Copying Alert Service periodically monitors follow-up patent applications, and screens suspicious patents. After expert diagnosis, relevant information will be provided.
 
Ⓑ Mutual growth and cooperation among large corporations, SMEs, and microenterprises

1. By fully implementing the Interlocking System for the Cost of Goods Delivered, fair trade can be ensured between large corporations and SMEs.

Contracts will be signed with over 1,000 companies for the Interlocking System for the Cost of Goods Delivered. A support center to provide training and consulting for the system will be designated in the first half of 2024. Furthermore, a "Special Ex-Officio Investigation for the Interlocking System" will be carried out in the second half of 2024 to crack down on any illegal activities. MSS will partner up with an expert third-party organization to check for key raw materials and provide consultations for the Interlocking System.

2. The government will strengthen mutual growth and cooperation among large supermarkets and mom-and-pop stores.

In order to strengthen mutual growth and cooperation among large supermarkets and mom-and-pop stores, an indicator for mutual growth and cooperation with mom-and-pop stores will be newly applied in the Evaluation of the Mutual Growth Index for Large Corporations.
 

➂ Futures that we grow together

The government aims to boost the growth of venture capital investment. Furthermore, MSS will support startups and venture businesses in their globalization efforts and enhance their ability to adapt to changes in the external environment. These efforts are geared towards developing and supporting the future of small and medium enterprises (SMEs) and venture businesses.

Ⓐ Support startups and venture businesses in their globalization efforts

1. The establishment of the Startup Korea Fund and the Global Fund will boost venture investment growth momentum.

The government has announced that it will invest KRW 1.6 trillion in the entire fund of funds during the first quarter of 2024 to support and expand the growth of venture investment. A fund of funds will co-invest in the Startup Korea Fund, which financial institutions and large corporations privately raise. It will also aid in attracting overseas investment for promising Korean startups by raising more than KRW 1 trillion in Global Funds and establishing an overseas VC connection program. The government will amend related laws to enable the Large Corporation Collaborative Cooperation Fund to invest in the VC fund and to ease regulations on overseas investment by corporate venture capital (CVC) firms. The Overseas VC connection program aims to support promising Korean startups selected by top Korean and international venture capital firms to attract overseas investment as packages.

2. The Korean government will establish a global startup hub modeled after Station-F to globalize the Korean startup ecosystem. The government will also expand global partnership programs.

The revised Support for Small and Medium Enterprise Establishment Act will come into effect in August 2023 to offer assistance to foreign startups that have contributed to the Korean economy. In 2024, the government plans to create a global startup hub modeled after the Station-F, where companies, investors, and young people from around the world can interact freely. Additionally, the government will expand global partnership programs with leading Korean and international companies like Samsung Electronics and Open AI to help startups go global.

Ⓑ Improve the ability of SMEs to respond effectively

1. The government aims to enhance SMEs' capacities to adapt to the changing external environment, including digital transformation and carbon neutrality.

The private sector and the government are partnering up to provide personalized digital transformation support to 25,000 manufacturing small and medium-sized enterprises (SMEs) based on their capabilities. Additionally, a "Plan to Strengthen the Capabilities of Technology Supplying Companies" will be developed in the second half of 2024 to ensure efficient implementation of digital transformation. Moreover, a new project dedicated to greenhouse gas reduction infrastructure related to carbon neutrality will be supported. This project will receive 2.41 billion KRW in 2024 and will focus on responding to initiatives like EU-CBAM.

2. The government is committed to providing strong support for research and development, particularly in tackling difficult challenges. It also aims to enhance international cooperation in the field of R&D.

The government aims to prioritize supporting research and development (R&D) initiatives for difficult challenges, particularly those related to the 12 national strategic technologies and those to help achieve carbon neutrality. Furthermore, the global R&D cooperation center, located in Kendall Square, Boston, USA, is set to launch officially to enable international technological cooperation.

Global Media Relations : Rachel Minjo CHUN
+82-(0)44-204-7104 / rachelmchun@korea.kr