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Subject First Anniversary of the Transition to SME-Led Economy
Division Policy Coordination Division Date 2018.08.01
Read 4028 Writer Deputy Director Minsoo Kim
Headline MSS pushed for 904 specific tasks of 64 policies during the last year since its inauguration.
The Ministry of SMEs and Startups(MSS), which was launched to resolve low growth and polarization of the Korean economy by promoting SMEs, celebrated the first anniversary of its birth on July 26th, 2018. Minister of SMEs and Startups, as a Cabinet member, submitted and processsed the legislation for SMEs and micro-enterprises, and exerted its voting right on national agenda submitted by each ministry as the spokesperson of SMEs. MSS, after Minister Hong took office on Nov. 21st, 2017, unveiled and processed three measures such as the Measure to Eradicate Technology Theft of SMEs in Feb. 2018, the Measure to Increase SME Payment in April, 2018, and the Measure to Establish Win-Win Cooperation between large and small companies in May, 2018 through three consultations between the government and political party.

MSS formulated and unveiled 904 tasks of 64 policies during the last year, using its increased functions and roles under the incumbent administration to realize a SME-driven economy.
1 (Job and Income-Led Growth) MSS purshed for supporting diverse areas such as creating jobs, complementing the recent hike in minimum wages, and assisting micro-enterprises. It also actively reflected SME  voices, which ask for more active government role.
2. (Innovative Growth) MSS revamped its policy direction from government-led to private-led approaches to increase policy effectiveness for SMEs and startups. It also tried new approaches in regulatory reform in making regulatory issues public such as opening cafes and broadcasting an online regulatory relaxation process live.
3. (Fair Economy) Win-win cooperation between large and small companies, which has been led by partner companies of large enterprises, has expanded to non-engaging companies. MSS has strived to cut off unfair transactions in all areas such as technology theft, franchise and distribution.

SME policy of the Moon Jae-in administration is characterized by its strong support for SMEs and startups, which is quite different from previous governments.
1. (Fair Economy and Win-Win Innovation) MSS eradicated wrong practices in cooperation between large and small companies such as technology theft and steep reduction in prices through legal protection. It actively supported voluntary cooperation between large and small companies, and induced voluntary expansion of win-win cooperation. The measures to eradicate technology theft include repaying damages caused by technology theft up to 10 times and putting proving responsibility on suspected companies. It also made it legal for SMEs to ask for increase in prices in case when labor costs increase due in part to a hike in minimum wages. Furthermore, when large companies help SMEs adopt smart factories, the government provide matching assistance.
2. (HR Investment) MSS provides radical assistance to young employees in SMEs to provide young workers for SMEs and decent SME jobs for young workers. For new employees, MSS supports wages, tax reduction, downpayment in rent and transportation costs to match the wage level of large enterprises. For current workers of SMEs, it reduces 90% of income tax and transportation costs, which result in income increase worth of 4.6 million won annually. For SMEs which employ young workers, it provides radical support in taxation and budget, which result in up to 25 million won per person.
3. (Private-Sector Drive) MSS revamped the approaches of its startup ecosystem to be driven by the private sector and supported by the government. In operating the fund of funds, MSS changed its direction so that the private sector makes the proposal and the government makes the following investment. It increased the dynamism and creativity of the market by enabling the private sector to pick beneficiary companies so that the government can provide the following support.  As a result, a special case of listing was made in KOSDAQ for the first time, and public equity funds were introduced in KOSDAQ for business ventures.
4. (Grassroots Economy Centered) MSS strived to increase the incomes of micro-enterprises and the self-employed and reduce their burdens by providng legal protection and giving increased financing. First, it strongly protects commericial districts by legislating the special act on the designation of subsistent sectors appropriate for micro-enterprises. Second, it implemented stron package assistance to reduce the burden caused by the hike in minimum wages. Third, it gave the authority to ask for an adjustment in franchise fees to the franchise headquarters in case of increase in costs caused partly by the recent hike in minimum wages. Fourth, it protects traditional markets from fires and revitalizes traditional markets by changing its approaches to be led by the private sector and supported by the government.

As a result of such efforts, the startup environment has improved and some idex are showing signs of improvement in export and productivity. However, wage gaps between large and small companies and income gaps among the self-employed contine, and the business sentiment of SMEs and micro-enterprises doesn't show signs of recovery because of industrial restructuring and sluggish domestic demand.

For the time being, MSS will make the following efforts to make the above-mentioned policies take root and produce tangible results. First, it will make constant communication with SMEs through listening tours by area, and provide stronger support for areas that produce achievements, and improve weaker areas. Second, it will provide a timely response to urgent issues such as additional measures to cover the costs from the hike in minimum wages, and the introduction of zero payment fees for micro-enterprises. Third, it will make continued efforts to realize a SME-driven economy and create an open innovative nation. Minister Hong said that SMEs, startups, micro-enterprises, laborers and the general public need to walk along to promote growth led by income and innovation. He added that MSS, as the spokesperson of SMEs, startups, and micro-enterprises, will take the lead in putting SMEs first as a core ministry.
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