Village Enterprise Act Enacted After 15 Years... Expected to Boost Local Economies

1,800 Village Enterprises Decrease by 4% Due to Budget Cuts
Legal Basis for Support Established with Law Enactment on the 23rd
Ministry of the Interior and Safety: "Regional Economic Revitalization Expected"

The "Village Enterprise Project," which has been operated to revitalize local economies, has gained a legal basis for government support for the first time in 15 years since its implementation. Previously, due to a lack of legal framework, there were difficulties in securing budgets and other resources. However, with the enactment of this law, it is now evaluated that village enterprises will be able to achieve sustainable growth.

On the 23rd, the Ministry of the Interior and Safety announced that the "Village Enterprise Development and Support Act," which includes the designation and cultivation of village enterprises, administrative and financial support, and support systems, had passed the National Assembly plenary session.

Village enterprises are community-based businesses in which local residents utilize various regional resources to create income and jobs and address local issues such as population decline. The initiative has been actively promoted since 2011. The project has had positive effects on balanced regional development, community revitalization, and increased resident participation, leading to calls for active government support. However, because it was operated only under the "Village Enterprise Promotion Project Guidelines" and local government ordinances without a separate law, there were limitations in providing systematic administrative and financial support at the national level.

On the 23rd, the "Village Enterprise Development and Support Act," which includes designation and cultivation of village enterprises, administrative and financial support, and support systems, passed the National Assembly plenary session.

According to the Ministry of the Interior and Safety, the number of village enterprises decreased by 4.1%, from 1,800 in 2023 to 1,726 last year. During the same period, total sales fell by 0.6%, from 309 billion won to 307 billion won. It is interpreted that, in addition to the lack of a legal foundation, a reduction in financial support over the past two years has led to a contraction in the scale and activities of village enterprises. As a result, there have been calls for an urgent need for a legal basis to resolve uncertainties regarding the sustainability of village enterprises.

The newly passed Village Enterprise Act includes provisions for: ▲ establishment and implementation of basic and annual plans; ▲ conducting surveys on activities and business status; ▲ establishing a committee for the development and support of village enterprises; ▲ designation and administrative and financial support for village enterprises; and ▲ establishment and designation of support organizations in each city and province.

The law also includes preferential provisions for village enterprises established and operated in depopulated areas and for youth village enterprises, which is expected to add momentum to effective support policies for balanced regional development and responses to regional extinction.

The Village Enterprise Project has shown particularly notable policy effects in depopulated areas. The proportion of village enterprises in depopulated areas increased from 34.4% (820 out of 2,386 designated village enterprises) to 39.9% at the end of last year (689 out of 1,726 active village enterprises). A Ministry of the Interior and Safety official stated, "Being designated as a village enterprise does not guarantee continued operation. The number of active enterprises decreases if they close down, but in depopulated areas, the survival rate is higher compared to the number designated."

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The Ministry of the Interior and Safety plans to use the enactment of the law as an opportunity to create data-driven support measures based on survey results and to specify "customized support," such as preferential treatment for village enterprises in depopulated areas and for youth village enterprises, in order to respond to the crisis of regional extinction.

Minister of the Interior and Safety Lee Hojoong stated, "The newly enacted Village Enterprise Act is expected to create even greater synergy in conjunction with basic social realization policies and the revitalization of the social solidarity economy," adding, "We will provide full support in cooperation with local governments so that village enterprises can play a key role in restoring local communities and fostering grassroots economic growth amid the threat of regional extinction."

The law, which passed the National Assembly this time, is scheduled to take effect one year after the completion of related preparations, such as the revision of enforcement decrees.