Junggyeonryeon Urges Improvement of 'Mid-sized Enterprise Development Policy' in the 21st National Assembly

Delivery of 43 Policy Recommendations in 7 Major Areas Including Establishing a Foundation for Innovative Growth

[Asia Economy Reporter Kim Cheol-hyun] Ahead of the April general elections, the mid-sized enterprise sector delivered 43 policy proposals across 7 key areas, including the establishment of an innovation growth foundation, to the political sphere. The Korea Federation of Mid-sized Enterprises announced on the 3rd that it had submitted 'Mid-sized Enterprise Policy Proposals' to both ruling and opposition parties such as the Democratic Party of Korea, the United Future Party, and the Justice Party. These policy proposals consist of 43 tasks in 7 major areas: establishing an innovation growth foundation, fostering mid-sized enterprises, creating a tax environment conducive to business, building a foundation for job creation, nurturing long-lived companies, establishing a foundation for fair trade and win-win cooperation, and improving the business management environment.

The Federation identified the mandatory regulatory review of legislator-proposed bills as the top priority task for establishing an innovation growth foundation. The intent is to correct the situation where legislator-initiated bills hinder the government's efforts to improve regulations. Although the government is striving to ease regulations, numerous regulations that dampen corporate vitality are being produced through legislator-proposed bills. The Federation stated, "To prevent unnecessary legislative abuse and enhance the validity and effectiveness of bills, legislator-proposed regulations should undergo a reasonable review system verification, just like government-initiated bills that go through regulatory impact assessments and internal reviews."

Additionally, the Federation urged urgent improvements, noting that imposing criminal penalties in addition to administrative sanctions for administrative duty violations could excessively suppress national economic activities. They proposed abolishing imprisonment penalties under the dual punishment rule for administrative law violations and limiting minor violations to administrative fines.

To foster the foundation for mid-sized enterprise growth and create a tax environment favorable to business, they suggested expanding financial support, introducing income tax reductions for domestic engineers in material, parts, and equipment companies, and increasing tax support for mid-sized enterprise R&D and facility investments. For building a foundation for job creation, they called for improvements to the selective working hours system and discretionary labor system, as well as allowing substitute labor during illegal disputes and strikes at workplaces. They also proposed policy environment improvements to nurture long-lived companies, such as expanding the scope and limits of business succession tax deductions, abolishing the premium evaluation on shares held by major shareholders, and increasing the special gift tax exemption limits on business succession shares.

Regarding the establishment of a foundation for fair trade and win-win cooperation, the Federation stated that it is necessary to fully revise the Act on Promotion of Mutual Growth between Large Enterprises and Small and Medium Enterprises to expand support for win-win cooperation from small businesses to early-stage mid-sized enterprises and to provide incentives for autonomous win-win cooperation between companies. To improve the business management environment, they proposed prohibiting the National Pension Fund from actively exercising shareholder rights, improving the 5% rule, and abolishing restrictions on shareholder voting rights.

Kang Ho-gap, Chairman of the Federation, said, "The 21st National Assembly should be a 'National Assembly that revives the economy' and a 'National Assembly for the people,' not a 'National Assembly of political strife.' I earnestly hope that both ruling and opposition parties will devote themselves to economic revitalization legislation to overcome the crisis and enable Korea's leap forward."