Rep. Kim Woni Proposes Amendment to Trade Insurance Act

Strengthening Trade Finance for SMEs and Mid-Sized Companies
with New Export Factoring System

Won-Ki Kim, Member of the National Assembly.

Kim Woni, a National Assembly member from the Democratic Party of Korea, has sponsored a partial amendment bill to the Trade Insurance Act aimed at strengthening the export competitiveness of small and medium-sized enterprises (SMEs) and mid-sized companies.

This amendment is intended to provide an institutional basis for the "Trade Finance Innovation Plan" announced at the public-private joint export expansion meeting held on February 25. According to the government's announcement, exports last year reached a record high of USD 709.3 billion, and the supply of trade finance also hit an all-time high at KRW 354 trillion.

However, the utilization rate of trade finance by SMEs and mid-sized exporters stood at only 35.2%, and 70.9% of companies responded that the scale of policy finance was insufficient, indicating that the perceived gap remains significant. In particular, SMEs accounted for only 2% of the existing export factoring support.

The amendment includes the introduction of an "export factoring" system, allowing the Korea Trade Insurance Corporation to directly purchase export receivables held by SMEs and mid-sized companies without recourse. The aim is to improve corporate liquidity and expand the lending capacity of financial institutions.

Additionally, the amendment allows for direct investment linked with insurance and guarantees to support capital expansion for high-quality SMEs and mid-sized companies. It also establishes the legal basis for creating a special account to strengthen support for high-risk industries such as shipbuilding. The main target is to support orders from small shipbuilders who have faced difficulties in obtaining advance payment refund guarantees (RG).

Kim stated, "Despite record-high exports, SMEs and mid-sized companies have not sufficiently felt the benefits," adding, "By legally supporting innovative measures such as export factoring, investment linkage, and the creation of special accounts, we will strengthen trade finance support and realize 'exports for all.'"

This content was produced with the assistance of AI translation services.