"Financial Services Commission Essential for Sustained Growth of Mid-sized Companies"

Seminar on Resolving Financial Difficulties of Mid-sized Companies and Advancing Corporate Finance... Proposal of 7 Key Tasks

On the 17th, Kang Ho-gap, Chairman of the Korea Federation of Medium-sized Enterprises, is delivering the opening address at the seminar on 'Resolving Financial Difficulties of Medium-sized Enterprises and Advancing Corporate Finance.'

[Asia Economy Reporter Kim Cheol-hyun] There has been a call for the operation of the "Mid-sized Enterprise Finance Committee," a public-private consultative body aimed at identifying and resolving issues in mid-sized enterprise finance. Along with this, seven major tasks to alleviate financial difficulties for mid-sized enterprises have been proposed. This stems from the recognition that financial challenges are acting as obstacles to the sustainable growth of mid-sized enterprises.

On the 20th, the Korea Federation of Mid-sized Enterprises, together with the Mid-sized Enterprise Research Institute and the Korean Association of Mid-sized Enterprises, announced the results of the seminar titled "Measures to Alleviate Financial Difficulties of Mid-sized Enterprises and Advance Corporate Finance." The seminar, held on the afternoon of the 17th, was attended by about 100 participants from government, financial institutions, academia, and the mid-sized enterprise sector, including Kang Ho-gap, Chairman of the Korea Federation of Mid-sized Enterprises; Kim Yong-rae, Director of Industrial Innovation Growth at the Ministry of Trade, Industry and Energy; Lee Se-hoon, Financial Policy Officer at the Financial Services Commission; Cho Byung-sun, Director of the Mid-sized Enterprise Research Institute; and Lee Hong, Chairman of the Korean Association of Mid-sized Enterprises.

In his keynote presentation, Director Cho Byung-sun stated, "Mid-sized enterprises, the backbone of the Korean economy and key creators of quality jobs, have long been neglected in the blind spots of financial policy." He proposed seven tasks to alleviate financial difficulties and advance corporate finance for mid-sized enterprises. These include the establishment of the Mid-sized Enterprise Finance Committee, improvement of credit rating adjustment practices, supplementation of loan screening processes, reform of fund recovery practices for non-prime companies, introduction of a tailored Primary Collateralized Bond Obligation (P-CBO) issuance program for mid-sized enterprises, expansion of financial support from policy banks to mid-sized enterprises, and enhancement of credit support from the Korea Credit Guarantee Fund and Korea Trade Insurance Corporation for mid-sized enterprises.

He added, "Banks, the main providers of finance to mid-sized enterprises, should improve pro-cyclical lending practices, credit rating adjustment practices unfavorable to companies, and unilateral fund recovery practices for insolvent companies. It is desirable to utilize corporate health diagnosis and consulting functions in the loan screening process so that future information of companies, along with past performance such as financial statements and creditworthiness, is appropriately reflected." Director Cho also emphasized, "A department-level organization responsible for financial affairs should be newly established within the Ministry of Trade, Industry and Energy to monitor trends and realities of related finance from the perspectives of industrial policy and mid-sized enterprises. Through close communication with financial authorities and the corporate field, financial difficulties of mid-sized enterprises should be resolved, enabling finance to more effectively support industry."

During the panel discussion, Cho Bong-hyun, Director of the IBK Economic Research Institute, said, "To create a healthy and vibrant corporate ecosystem, the role of finance supporting the innovative growth of mid-sized enterprises is very important." He added, "A negative regulatory approach should be introduced to drastically improve financial regulations that act as obstacles to the sustainable growth of mid-sized enterprises. Proactive policy efforts such as establishing financial regulation free zones and expanding demand-tailored direct finance should be expedited."

Kang Ho-gap, Chairman of the Korea Federation of Mid-sized Enterprises, stated, "Due to uniform financial policies, there are many times when we have no choice but to give up large-scale contracts with overseas companies that are just within reach." He added, "I hope that the president’s will, who promised a 'certain change' for Korea in 2020, will be fully reflected in financial policy as well, leading to definite policy changes that support the sustainable growth of mid-sized enterprises, the backbone of our economy and key creators of quality jobs."