93.1% of Mid-sized Companies Expect Business Environment to Remain Stable or Improve After New Government Inauguration

'Worsening' Outlook at 6.9%

[Asia Economy Reporter Kim Cheolhyun] A survey revealed that 93.1% of mid-sized companies expect the business environment to be maintained or improve following the inauguration of the new government.

The Korea Federation of Mid-sized Enterprises announced on the 12th in its 'New Government Inauguration, Mid-sized Enterprises Opinion Survey' that 44.2% of mid-sized companies anticipate an improvement in the business environment after the new government takes office, while 48.9% expect it to remain the same. Only 6.9% of mid-sized companies responded that the business environment would worsen in the future. The percentage expecting a severe deterioration was 1.6%.

This survey was conducted from March 17 to March 25, targeting 188 mid-sized companies. The mid-sized enterprise sector identified economic revitalization (67.6%) as the top priority for the new government. National unity (13.3%), government reform (5.9%), and labor reform (4.8%) followed.

Additionally, the top economic policy tasks pointed out by the mid-sized enterprise sector were 'deregulation to remove growth obstacles (32.4%)', 'promotion of mid-sized and small enterprises (25.0%)', and 'labor reform such as flexible working hours (23.4%)'. Manufacturing selected 'deregulation (38.8%)' as the top economic policy task, while non-manufacturing chose 'promotion of mid-sized and small enterprises (30.6%)' as their first priority.

Regarding policies to foster mid-sized enterprises, 'regulatory relaxation to the level of large corporations (31.9%)' accounted for the highest proportion. Other demands included 'strengthening the policy foundation for fostering mid-sized enterprises, such as converting the Mid-sized Enterprises Special Act into a permanent law (21.8%)', 'alleviating growth burdens for early-stage mid-sized companies (19.1%)', and 'supporting competitiveness in new industries and new technologies (18.6%)'.

Mid-sized enterprise representatives stated that the new government should actively implement policy efforts such as 'expanding financial and tax support related to employment (42.0%)', 'enhancing labor market flexibility (25.5%)', and 'creating an environment favorable for investment (21.3%)' to support job creation by mid-sized companies. Both manufacturing (35.0%) and non-manufacturing (47.2%) sectors selected 'expanding financial and tax support related to employment' as their top priority. Additionally, manufacturing chose 'expanding support for reshoring and creating an environment favorable for investment (30.0%)', while non-manufacturing selected 'enhancing labor market flexibility (25.9%)' as their second priority.

The top priorities by sector were: in employment and labor, 'flexible working hours (35.6%)'; in taxation, 'corporate tax rate reduction (32.4%)'; in technological competitiveness, 'strengthening R&D tax and financial support (37.8%)'; in export competitiveness, 'supply chain management and raw material stabilization (54.3%)'; and in carbon neutrality and ESG management, 'establishing incentives for ESG management companies (30.9%)'.

Park Iljun, Executive Vice Chairman of the Korea Federation of Mid-sized Enterprises, emphasized, "To effectively respond to rapidly changing domestic and international economic conditions such as the pandemic, global supply chain restructuring, and climate change, we must accelerate groundbreaking regulatory improvements to restore the smooth circulation of the growth ladder."