[2020 National Audit] The 'Rechallenge Success Package' That Twice Breaks the Hearts of Failed Small Business Owners

Kwon Myung-ho, member of the People Power Party. Photo by Office of Rep. Kwon

[Asia Economy Reporter Moon Hyewon] The 'Re-Startup Success Package,' implemented to assist failed small business owners in restarting their ventures, has ironically caused further distress to these entrepreneurs, failing to fulfill its intended purpose.

According to data on the 'Re-Challenge Success Package Project Status' submitted by the Ministry of SMEs and Startups to Kwon Myung-ho, a member of the National Assembly's Industry, Resources, Trade, and SMEs Committee from the People Power Party, 6,223 companies applied for this project budget from 2015 until last month. However, only 21.7% (1,350 companies) received budget support. The execution rate was only 22.1%, with 82.6 billion KRW spent out of the 373.3 billion KRW requested.

Assemblyman Kwon pointed out that the support limit per company (60 million KRW) is too low, making the costs required for the project to take root insufficient. He also identified the annual budget of only 26 billion KRW, which is distributed among six regional institutions nationwide, as a problem hindering efficient support.

According to Assemblyman Kwon, the six regional institutions in Gangwon, Gyeonggi, Daegu, Seoul, Sejong, and Jeonbuk have fixed numbers of companies and amounts they can support annually, making efficient and prompt project execution difficult.

The Seoul headquarters, which has the largest budget, was allocated 3.9 billion KRW this year but can only support 96 companies. Particularly, regions with many small business owners who closed due to employment crises and industrial crisis response special zones?such as Ulsan, Tongyeong and Geoje in Gyeongnam, Changwon Jinhae, and Yeongam and Mokpo in Jeonnam?have no institutions where applications can be submitted, leading to growing dissatisfaction with the regional selection criteria.

Assemblyman Kwon stated, "The annual budget of 26 billion KRW for supporting re-challenge companies is far from sufficient," and added, "The Ministry of SMEs and Startups and the Korea Institute of Startup & Entrepreneurship Development must increase the Re-Challenge Success Package budget, rationalize the support amounts, and do their best to improve social perceptions of re-entrepreneurs."