Public Procurement Amount of SME Products Surpasses 100 Trillion Won for 3 Consecutive Years

[Asia Economy Reporter Donghyun Choi] The amount spent by domestic public institutions on purchasing products from small and medium-sized enterprises (SMEs) in the public procurement market has exceeded 100 trillion won for three consecutive years.

On the 26th, the Ministry of SMEs and Startups announced that the purchase amount of SME products in the public procurement market reached 119.7 trillion won last year. The purchase amount of SME products, which was around 92.2 trillion won in 2017, has steadily increased to 105 trillion won in 2019 and 116.3 trillion won in 2020. A ministry official stated, "This amount was achieved amid a sharp contraction in domestic market demand due to the spread of COVID-19," and added, "We expect that SME products exceeding last year's level will be sold in the public procurement market this year as well."

The purchase of SME products by public institutions is operated under the 'SME Product Public Procurement Target Ratio System.' This system mandates that at least 50% of products purchased in the public procurement market must be from SMEs, and it also legally sets mandatory purchase ratios for technology development products, women-owned enterprise products, and disabled-owned enterprise products, thereby supporting SMEs' market access.

This year, the number of public institutions (national agencies, local governments, public institutions, etc.) required to meet the SME product purchase targets is 849. Their SME product purchase target amount for this year is 121.1 trillion won. While the purchase amount of SME products continues to increase steadily, SME technology development products have increased by 2.1 trillion won over the past five years. During the same period, the public procurement amount for women-owned enterprise products increased by 2.9 trillion won, and for disabled-owned enterprise products by 900 billion won.

The Ministry of SMEs and Startups selects excellent institutions annually among public institutions with an SME product purchase ratio of over 90% and a purchase amount exceeding 300 billion won. In the case of education offices, Jeollabuk-do, Gyeongsangbuk-do, and Chungcheongbuk-do were selected last year. Basic local governments such as Yongin-si, Gimpo-si, and Jinju-si, as well as public institutions like Korea Railroad Corporation, were also selected.