50% Rent Reduction Campaign for the Next 3 Months
Spirit of Coexistence Between SMEs and Small Business Owners
70.3% of SMEs "Suffered Business Damage Due to COVID-19 Spread"
62.0% "Special Guarantees and Support Should Be Expanded for Affected Companies"
Kim Ki-moon, Chairman of the Korea Federation of Small and Medium Business, is speaking about the campaign for good landlords centered on small and medium enterprises at the 'COVID-19 Spread Briefing' held on the 27th at the federation's headquarters in Yeouido, Seoul.
[Asia Economy Reporter Kim Daeseop] "I propose that small and medium-sized enterprises (SMEs) take the lead in a nationwide 'Good Landlord Movement' based on the spirit of coexistence where the weak protect the weak."
Kim Gi-moon, Chairman of the Korea Federation of SMEs, said this on the 27th at the headquarters in Yeouido, Seoul, during a briefing on the spread of the novel coronavirus infection (COVID-19). He added, "So far, the SME sector has talked about coexistence between large corporations and SMEs and has received many policy supports and benefits from the government. Now it is time for SMEs to look back on coexistence with small business owners."
At the briefing, the results of the Korea Federation of SMEs' emergency management status survey and the launch of the Good Landlord Movement campaign were announced. The Good Landlord Movement is a campaign to reduce rent by 50% for the next three months to alleviate the burden on small business owners who are directly affected by COVID-19.
Chairman Kim conveyed the industry's concerns about the nationwide spread of COVID-19. He explained, "Since the sharp increase in confirmed cases in the Daegu and Gyeongbuk regions last weekend, SMEs are experiencing a rapid decline in sales and depletion of funds. Small business owners who live day-to-day are effectively in a state of temporary closure due to a decrease in visitors and are appealing that they are on the verge of shutting down."
He continued, "Despite the sharp drop in sales, it is difficult to obtain additional loans or extend matured loans. Especially, many small business owners, although small in scale, already have existing loans, making it practically difficult to receive additional loans from banks," emphasizing the need for drastic measures.
Kim Ki-moon, President of the Korea Federation of Small and Medium Business (second from the right), is presenting the results of the Small and Medium Business Management Survey at the 'COVID-19 Spread Briefing' held at the headquarters in Yeouido, Seoul on the 27th.
The Korea Federation of SMEs is negotiating with Daegu City to reduce the rent for tenants of the Daegu SME Exhibition and Sales Center. They plan to expand the current 20% discount to 50%. They also plan to urge participation from 657 SME organizations and cooperatives. Active participation will also be requested from 170,000 landlords enrolled in the Yellow Umbrella Mutual Aid.
According to the Korea Federation of SMEs, 41% of domestic manufacturing workplaces and 75% of service businesses are leased premises. If the Good Landlord Movement spreads, a significant number of small business owners are expected to benefit.
Chairman Kim said, "We do not know how many people will participate in the Good Landlord Movement, but the SME sector will do its best to overcome the crisis caused by COVID-19."
The Korea Federation of SMEs has strengthened its crisis response system as the government raised the crisis alert to the severe level due to the rapid nationwide spread of COVID-19. The existing 'COVID-19 Emergency Response Team' was upgraded to the 'COVID-19 SME Countermeasures Headquarters.'
In particular, from the 25th to the 26th, an emergency management status survey was conducted targeting 300 export-import companies and small business owners. The survey results showed that 7 out of 10 SMEs and small business owners suffered damage due to the spread of COVID-19.
70.3% of SMEs reported operational damage due to the spread of COVID-19. Among export-import companies, 72.3% (66.7% of exporters and 78.2% of importers) experienced operational damage. Domestic service companies also reported damage at a rate of 67.6%. This emergency survey result is more than double the operational damage rate (34.4%) reported in the first survey conducted earlier this month related to COVID-19.
Among companies importing raw materials or parts from China, 4 out of 5 reported damage. 51.6% of export-import companies complained of delivery disruptions due to the shutdown of Chinese factories. 40.1% experienced business activity disruptions due to reduced opportunities to visit China. 66.5% of domestic service companies responded that they suffered sales declines due to decreased visitors and economic downturn.
Regarding government support measures that should be prioritized (multiple responses allowed), 'special guarantees and expanded support for affected companies' (62.0%) was considered the most important. This was followed by 'expansion of employment retention subsidies' (47.3%) and 'temporary deferral plans for customs duties, national taxes, and other tax payments' (45.7%).
The Korea Federation of SMEs, following government policy, could not visit sites directly but urgently secured 50,000 protective masks, 10,000 hand sanitizers, and 10,000 disinfectant wipes, which are in high demand related to COVID-19. These will be distributed mainly to distribution centers and cooperative supermarkets with high public contact in affected areas such as Daegu and Gyeongbuk, where confirmed cases are highest, as well as Busan. Donations and support will continue until COVID-19 is eradicated.
Chairman Kim reiterated, "The Korea Federation of SMEs will continue to promptly identify damage situations on the ground, develop policies, and continuously monitor government support measures. We will do our best to help small business owners and SMEs overcome this crisis."
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