Kwon Chil-seung "Promotion of Business Transition Fund Support for Small and Medium Enterprises in Kaesong Industrial Complex When Changing Business Types"

Up to 10 Billion KRW Support and Preferential Policy Funds Considered for SME Business Transition in Kaesong Industrial Complex

Minister Kwon Chil-seung of the Ministry of SMEs and Startups. Photo by Ministry of SMEs and Startups [Image source=Yonhap News]

[Asia Economy Reporter Kim Heeyoon] Kwon Chilseung, Minister of the Ministry of SMEs and Startups, stated, "If small and medium-sized enterprises (SMEs) residing in the Kaesong Industrial Complex face difficult business conditions and pursue industry changes due to their unique circumstances, we will consider support measures for business transition funds."

On the 26th, Minister Kwon made this remark during his visit to the northern Gyeonggi region as part of the second phase of the "Small but Certain Happiness (So-hwak-haeng)" initiative. The Ministry of SMEs and Startups proposed support measures including up to 10 billion KRW in funding and the highest level of preferential policy funds for companies transitioning their business in relation to supporting companies residing in the Kaesong Industrial Complex.

So-hwak-haeng is an event where Minister Kwon uses his afternoon schedule to directly communicate with local SMEs and small business owners, reflect their on-site difficulties in policies, and encourage stakeholders. Following the first phase of So-hwak-haeng in the Chungnam region last August, the second phase was conducted today with visits to Paju and Goyang in northern Gyeonggi.

On this day, Minister Kwon held an on-site communication meeting with representatives of companies residing in the Kaesong Industrial Complex who have been experiencing management difficulties such as temporary closure, business suspension, and sales decline since the complex's closure in February 2016. He also visited the production site of Manseon, a clothing sewing manufacturer located in Goyang City, to encourage the related personnel.

According to the "5th Anniversary Survey of Companies Residing in the Kaesong Industrial Complex" released by the Korea Federation of SMEs in February, about 14% of the 113 resident SMEs have temporarily closed or ceased operations. Sales of 76.6% of resident companies decreased in 2020 compared to 2015, and sales of small-scale companies with less than 5 billion KRW in sales dropped sharply by 76.1%.

At the meeting, six representatives from member companies of the Gyeonggi Kaesong Industrial Complex Association and resident company representatives expressed hope for the prompt reopening of the Kaesong Industrial Complex. They also requested policy funds and financial support to ensure corporate survival until reopening, as well as support for domestic and international sales channels and marketing for their products.

The Ministry of SMEs and Startups has provided 119.5 billion KRW in policy funds to a total of 113 companies residing in the Kaesong Industrial Complex and lowered the loan interest rate by 1 percentage point from 3% to 2% in January this year.

Furthermore, the Ministry announced that it will actively explore support measures such as the highest level of preferential policy funds compared to other programs for Kaesong Industrial Complex resident companies and up to 10 billion KRW in business transition funds if they pursue industry changes. It also plans to consider support measures (including additional points) through marketing projects such as opening a "dedicated sales store for SME products" to expand sales channels for resident companies' products.

Minister Kwon said, "The reopening of the Kaesong Industrial Complex will be an important key and starting point to resolve inter-Korean relations and can be a good opportunity for our SMEs."

Before the meeting with Kaesong Industrial Complex resident companies, Minister Kwon visited the Paju Youth Startup Academy and held a meeting with companies enrolled in the academy and military personnel aspiring to start businesses.

The Youth Startup Academy was established in 2011 and currently operates in 18 regions nationwide. He also had a discussion on promoting military entrepreneurship with four military personnel who passed the 'Challenge K-Startup' Defense League, a cross-government startup competition.

At the meeting, Minister Kwon said, "Since its opening in 2011, the Youth Startup Academy has produced nearly 5,000 graduates and is a representative government youth support policy. As it marks its 10th anniversary this year, we will review its achievements and shortcomings and consider a complete overhaul of the selection and education process to become a talent development center that matches youth sensibilities and meets their needs."

He added, "We will further strengthen entrepreneurship education and mentoring for military personnel so that young people serving in the military can dream of and realize entrepreneurship."

Meanwhile, to listen to and encourage small business owners' difficulties, Minister Kwon visited 'Bobaejip,' a century-old store designated last August, and held a plaque ceremony and luncheon.