[Manbo Jeongdam] Oh Young-joo, Minister of SMEs and Startups, "We Will Make SMEs Smart and Global"

"Need to Clarify the Medium and Small Business Act... Strengthen Consulting"
"National Economic Growth Engine Comes from Small and Medium Venture Enterprises"
Packing Sneakers in Business Bags to Walk Anywhere

Among the policies promoted by Oh Young-joo, Minister of the Ministry of SMEs and Startups, many are labeled as 'firsts.' Recently, the Ministry of SMEs and Startups held its first-ever discussion with Japan's Ministry of Economy, Trade and Industry on cooperation measures for the development of small and medium-sized enterprises (SMEs) between the two countries. In April, in consultation with the Ministry of Foreign Affairs, they opened a 'dedicated support window for SMEs' at overseas diplomatic missions, which was also a first.

This reflects Minister Oh's style of boldly taking on challenges that others have not attempted. She is the first diplomat from Ewha Womans University and said she took the foreign service exam because "there were many seniors from my alma mater who passed the judicial and administrative exams, but none who passed the foreign service exam, so I wanted to be the first." After passing the exam, she spent 35 years on the diplomatic stage and was appointed Minister of SMEs and Startups in December last year. She is the first diplomat to head the Ministry of SMEs and Startups.

Minister Oh Young-joo of the Ministry of SMEs and Startups is walking through Gwanghwamun Square in Jongno-gu, Seoul, responding to an interview with Asia Economy. Photo by Jo Yong-jun jun21@

On the afternoon of the 31st of last month, Minister Oh stepped out to Gwanghwamun Square in Seoul wearing a light suit and white sneakers. With the motto 'Woomunhyeondap' (Our problems have answers on the ground), Minister Oh, whose business trips are tightly scheduled, always carries an extra pair of sneakers to walk whenever she has a chance. She said, "When it's not an official event, I wear sneakers and walk whenever I can," adding, "Even when I get off work and go home, I don't take the elevator but walk up the stairs." On weekends, she walks the Jin-gwan-sa Temple and Bukhansan Dulle-gil trails near her home.

Below is a Q&A with Minister Oh.

- It has been 150 days since your inauguration. What is the most memorable event?

▲ The announcement of the SME Leap Strategy is the most memorable. All indicators of domestic SMEs, such as sales, employees, and exports, are trapped in a box range. SMEs and startups are the core driving force of national economic growth. The reason the Japanese government is strongly promoting startup policies is that their growth engine also comes from startups and venture companies. We are currently exploring ways for our SMEs to break out of this box range, but in the past, each department within the Ministry of SMEs and Startups was individually pondering this issue. After my appointment, I broke down the walls within the ministry. SMEs, small merchants, and venture companies are linked to the work of all departments in the ministry. I gathered with the directors to discuss together, and the policy we created by brainstorming with the staff is the recently announced SME Leap Strategy.

- You are implementing SME globalization policies in collaboration with the Ministry of Foreign Affairs. Collaboration with other ministries must not have been easy.

▲ My experience as ambassador to Vietnam was helpful. Overseas missions have three core tasks: economic diplomacy, cultural diplomacy, and development diplomacy. In Vietnam, over 40 public institutions participate, meeting quarterly by issue and theme to discuss and cooperate. My request to the Ministry of Foreign Affairs to establish a dedicated SME and startup support consultation window (hotline) at overseas missions was based on my experience as ambassador to Vietnam. When I proposed it directly to Foreign Minister Cho Tae-yeol, he readily accepted. Many things are now happening quickly at overseas missions. In Singapore, for example, the embassy hosted meetings by inviting potential customers of Korean SMEs and local venture capitalists.

- How did you come up with the idea to install an SME hotline at overseas missions?

▲ Taking Vietnam as an example, two-thirds of Korean companies operating locally are SMEs and startups. We opened the embassy doors wide to companies, saying we would listen to any story and support them. However, SMEs often did not know what support was available at the embassy or whom to contact. By having a dedicated window at overseas missions to handle SME and startup issues, I thought the Ministry of SMEs and Startups could connect companies operating locally with the respective missions through this window.

- What are your future plans for SME globalization?

▲ The global market entry of SMEs and startups is very important for the sustainable growth of our economy. To this end, we plan to expand export policies from product-centered to tech service sectors. Last month, we announced support measures for SME globalization that extend beyond exports to the overseas expansion of the companies themselves. We are preparing a separate detailed implementation plan to ensure that the globalization support measures are felt on the ground. We plan to quickly finalize next year's implementation tasks and launch pilot projects in the second half of this year. We will monitor monthly whether the implementation tasks are properly carried out.

Minister Oh Young-joo of the Ministry of SMEs and Startups is walking through Gwanghwamun Square in Jongno-gu, Seoul, responding to an interview with Asia Economy. Photo by Jo Yong-jun jun21@

- There are significant concerns about applying the Serious Accident Punishment Act to workplaces with fewer than 50 employees. What measures does the Ministry of SMEs and Startups have?

▲ The biggest problem with the Serious Accident Punishment Act is the unclear scope of obligations that companies must observe. The scope of obligations must be clear for SMEs to prepare, but currently, there are legal aspects that need to be re-examined. Companies are struggling because they do not know exactly what to do on the ground to comply with the law. Not only a two-year additional grace period is needed, but also a legal amendment to clarify the scope of obligations. We are discussing this with the National Assembly and SME organizations such as the Korea Federation of SMEs, and the Ministry of SMEs and Startups will help clarify the legal issues so that the law can be properly established.

- What support is provided to help SMEs prepare urgent measures?

▲ Currently, the Ministry of SMEs and Startups is conducting explanatory sessions for SMEs by visiting 13 regional SME offices to provide consulting on what and how to comply with current regulations. It is also very important for SMEs to establish a clean manufacturing environment. We plan to analyze the work processes in small merchants' workplaces using dangerous manufacturing equipment such as cutters and presses and help improve work environments that could cause accidents.

- Along with the Serious Accident Punishment Act, one of the two major issues for SMEs is the difficulty of business succession.

▲ After visiting SME sites since my appointment, many SME owners expressed difficulties with business succession. Especially in manufacturing SMEs, the founding generation is entering old age, but many children do not want to take over management. SMEs need to continue developing and become the center of national innovative manufacturing, but there are many obstacles to business succession, which is regrettable.

- Are there policies to create 100-year companies through smooth business succession?

▲ We consider new business transformation important. We will ease related regulations so that business succession can be at the level of a second startup. The current government is making many efforts to alleviate difficulties related to inheritance tax. Regulations related to SME business succession are continuously being eased, but the core going forward is to help successors transform the business into blue ocean markets. Recently, I visited an automobile parts company in Busan. It was a manufacturer of internal combustion engine parts, but as the automobile industry shifts to future cars, they faced difficulties such as preparing related facilities. We are preparing support measures for such cases.

Also, as more children refuse to succeed the family business, we have created support measures to enable 'corporate succession' through mergers and acquisitions (M&A). This is to prevent good companies from disappearing simply because they cannot pass the business from parents to children.

- What efforts are being made to restore investment in startups and venture companies?

▲ Investment related to startups peaked in 2021-2022. I believe the investment, which increased too much at that time, is now in an adjustment phase. Compared to other countries, investment in Korea has decreased less and recovered faster. Recent data shows that investment in artificial intelligence (AI) and deep tech sectors is increasing. Among Korean startups, those related to large language models (LLM) are receiving good overseas investment. Domestic investment is also becoming active.

Listening to voices from the provinces, many say that everything is concentrated only in Seoul, making it difficult to start a business in the provinces. Even if the headquarters and factories are in the provinces, the reality is that they must open an office in Seoul to receive investment. To resolve this, we plan to utilize the Korea Fund of Funds in the regions for startups and venture companies in the provinces. There are too few venture capitalists in the provinces. We are creating an angel investment hub to help good startups in the provinces thrive. This year, we plan to invest 100 billion won of the Korea Fund of Funds in regional startup revitalization.

Minister Oh Young-joo of the Ministry of SMEs and Startups is being interviewed by Asia Economy at her office on Sejong-daero, Seoul. Photo by Jo Yong-jun jun21@

- Many companies complained about difficulties due to the reduction of SME R&D budgets last year.

▲ R&D budgets must go properly to where they are needed. We need R&D that produces innovation from companies trapped in the box range. Over the past three months, we held roundtables to create SME R&D measures. We allocated 50% of the R&D budget to 12 national strategic technology fields. This is based on the judgment that global-centered R&D is necessary. We will invest R&D budgets in companies with growth potential even if there is risk.

Additionally, we gathered 1,300 excellent companies in the provinces and named them 'Legend 50+.' This policy allows local governments to proactively plan projects aligned with regional industrial strategies such as regional key industries, and the Ministry of SMEs and Startups provides policy funds, vouchers, smart factories, startup-focused universities, and other core policy tools in a three-year package according to the companies' high-demand needs. Previously, local governments applied for R&D support one by one, which was inefficient. Now, support projects are shared with all 1,300 companies so they can receive and use support according to their situation. I believe this is a policy to innovate the regional economy.

- Is support concentrated on SMEs in advanced industries?

▲ Not at all. Much support goes to SMEs in traditional industries as well. We will help these companies enter innovative areas and develop their businesses. Existing SMEs must innovate through smartization. Smartization will also help solve the serious labor shortage in SMEs. Additionally, we will alleviate labor shortages in provincial SMEs through policies that match foreigners who can work in Korea with local companies.

- After more than 35 years in public service, did you face difficulties as a woman?

▲ In the past, women could feel an invisible glass ceiling even in public service. But I did not see the glass ceiling as a limit. The existence of the ceiling became a goal to challenge. By maintaining a positive and fearless mindset, I overcame discrimination and gained more. Even during my time at the Ministry of Foreign Affairs, I sought departments and tasks where I could challenge myself, even if they were on the periphery rather than the mainstream that everyone wanted. Through such challenges, I faced a new challenge as Minister of SMEs and Startups. Going forward, I will challenge and succeed so that SMEs and startups become the core of dynamic changes in our economy.

About Oh Young-joo, Minister of SMEs and Startups...

▲ Born in 1964 ▲ Ewha Womans University, Department of Political Science and Diplomacy ▲ 22nd Foreign Service Exam ▲ Director-General of Development Cooperation Bureau, Ministry of Foreign Affairs ▲ Deputy Permanent Representative to the United Nations ▲ Coordinator for Multilateral Diplomacy, Ministry of Foreign Affairs ▲ Director of the Institute of Foreign Affairs and National Security, Korea National Diplomatic Academy ▲ Dispatched to the Presidential Transition Committee ▲ Ambassador to Vietnam

Interview by Lee Dong-hyuk, Head of Bio SMEs and Startups Division

Compiled by Reporter Lee Seung-jin