[Reporter’s Notebook] 10 Billion Won Yellow Umbrella System Project 'Large Corporation Privilege' Controversy

[Asia Economy Reporter Kim Bo-kyung] An unexpected controversy over preferential treatment for large corporations has erupted regarding the Yellow Umbrella Mutual Aid project, which serves as a safety net for 1.4 million small businesses and self-employed individuals. The dissatisfaction from the small and medium-sized enterprise (SME) sector arose when a large corporation entered the bidding for the next Yellow Umbrella system construction.

The Korea Federation of SMEs closed the re-bidding application for the Yellow Umbrella system construction project on the 19th. The issue was triggered when a certain large corporation expressed its intention to participate. The Yellow Umbrella Mutual Aid, operated by the Federation, aims to help small businesses and self-employed individuals secure a lump sum (retirement pay) in case of business failure. The project cost for building the Yellow Umbrella system is estimated to be between 11 billion and 12 billion KRW, and there has been controversy over the appropriateness of the private company selection process.

The SME sector raised their voices, saying, "This goes against the founding purpose of the Federation of SMEs." In particular, dissatisfaction has grown since a similar incident occurred in June last year. A representative from a competing SME said, "After last year's controversy, the Federation announced a re-bid at the end of the year, and the same large corporation again expressed its intention to participate, causing the controversy to repeat."

The Federation of SMEs finds the controversy itself embarrassing but is in a difficult position as it cannot ignore the procedures. According to the Software Promotion Act, projects worth 8 billion KRW or more ordered by government agencies cannot restrict participation by large corporations. The Federation stated, "For large-scale projects, it is understood that there is no legal restriction on company size because it may be difficult for SMEs to handle."

The Yellow Umbrella system urgently needs an upgrade for smooth operation as the number of subscribers has exploded. If the introduction of the next system is delayed, small businesses and the self-employed will ultimately suffer. The Federation previously awarded the project to Nongshim NDS in 2016 but failed to open the system and is currently involved in legal disputes. As a result, repetitive and unproductive debates continue. It is a challenging issue whether to follow social awareness and sentiment or to place more weight on legal and procedural legitimacy. In any case, the most important thing is a safe system and fair procedures that small businesses and the self-employed can trust and rely on.