Young Entrepreneurs "Unfairness in Procurement Market, Public Purchase System Needs Improvement"

Ministry of SMEs and Startups Holds Meeting with 5 Young Entrepreneurs to Improve Public Procurement System

O Gi-ung, Vice Minister of the Ministry of SMEs and Startups (center), is taking a commemorative photo with participants at the "Youth Entrepreneurs Meeting" held at EL Tower in Seocho-gu, Seoul, on the 30th of last month.

"Even if you obtain difficult certifications in the procurement market, there are too many loopholes, such as government officials or companies with large capital entering the competitive market among small and medium enterprises (SMEs) and winning contracts with just paperwork."

No Ji-hyo, CEO of Bitgle, appealed this at the 'Youth Startup Companies Meeting' held by the Ministry of SMEs and Startups on the 30th of last month at EL Tower in Yeoksam-dong, Gangnam-gu, Seoul. No, who manufactures special optical design high-efficiency LED lighting domestically, urged for system improvements, saying that despite having received the Public Procurement Service's excellent product certification and the Ministry of SMEs and Startups' performance certification, they are unfairly competing with companies that import parts from overseas, such as China, and simply package them to supply to the procurement market.

At the event, Oh Ki-woong, Vice Minister of the Ministry of SMEs and Startups, recognized the problems of the Direct Production Confirmation System. The Direct Production Confirmation System is a certification system that verifies whether SMEs directly produce products when public institutions purchase competitive products among SMEs. Vice Minister Oh said, "There are 631 products designated as competitive products among SMEs, but it is difficult to certify direct production within a short period, so it is realistic to proceed based on recommendations from organizations or institutions," adding, "From next year, we will extend the objection period and actively accept opinions from SMEs who think there are problems."

The meeting was organized to hear improvements to public procurement systems, including the Direct Production Confirmation System, the Pilot Purchase System for Technology Development Products, and the Performance Certification System. The Pilot Purchase System for Technology Development Products selects startup companies and SMEs with low procurement records as pilot purchase products to provide opportunities to supply public institutions. The Performance Certification System certifies that products developed by SMEs have secured quality and performance, supporting their entry into the public procurement market through negotiated contracts and other means.

Jung Seok-soon, CEO of The Bio, which manufactures photocatalytic air purification LED panel lights, requested improvements, saying the threshold to win contracts in the procurement market is too high. Jung said, "Although we obtained several certifications to enter the procurement market, we cannot compete at all with companies that already secure more than 90% of procurement sales," and appealed, "Even if we diligently promote that our product technology is superior to public institutions, they are reluctant to easily change the companies they have been dealing with." Regarding this, Vice Minister Oh promised to improve the system by collaborating with the Public Procurement Service to monitor public institutions that do not comply with the mandatory purchase ratio of SME products in real time. Vice Minister Oh said, "Our country's computer network has greatly advanced, and inter-ministerial cooperation has increased, so these problems will be improved in the future," adding, "We also plan to prepare methods such as providing incentives to public institutions that comply well with the system."

There were also SMEs that said it is difficult because product classification is not immediately done even if they develop innovative products. Park Geon-ah, CEO of Ellip, which produces disposable masks that block harmful gases in case of fire, said, "When trying to deliver after obtaining various certifications such as performance certification, innovative products, excellent products, and pilot purchase products, there are many cases where additional documents are requested because the product is not in the category," and said, "The classification items for new products or growth industry fields should be expanded to improve the problem."

The Ministry of SMEs and Startups promised to actively improve the system so that various new industry products can be designated as competitive products among SMEs newly designated next year. Vice Minister Oh said, "SMEs account for 120 trillion won out of the 200 trillion won public procurement market, so the proportion is very high," and stated, "We will innovate the public purchase system so that youth startup companies can enter the public procurement market more easily."