Chairman Kim Ki-moon “need support to overcome the mid-term complex crisis”… 4 major policy recommendations

In order to overcome the complex economic crisis faced by the small and medium-sized enterprises (SMEs), the government proposed four policy tasks: responding to supply chain crises and easing the financial burden. Kim Ki-moon, chairman of the Korea Federation of Small and Medium Enterprises, held a press conference on the 28th and said, “Small and medium-sized enterprises (SMEs) who are suffering from COVID-19 are facing the worst management difficulties these days, with high prices, high interest rates, high exchange rates, and shortage of manpower, as well as raw material prices skyrocketing.” It is urgent to legislate the indexation system, to take measures to extend loan maturity, to make a soft landing, and to close the labor market gap between large and small businesses,” he stressed.

Chairman Kim suggested four major policy tasks: Response to raw material price increases and supply chain crises, easing the financial burden of SMEs, major shifts in employment and labor policies, and creating conditions for innovative growth of SMEs.

First of all, Chairman Kim said that it is urgent to legislate the unit price indexation system in order to cope with the rise in raw material prices and the supply chain crisis. Chairman Kim emphasized, “In a situation where raw material prices are soaring, it should be stipulated by law so that small and medium-sized enterprises (SMEs) automatically reflect the increase in raw material prices in the unit price of delivery without requiring a separate request from the consigned company.” did. Chairman Kim also mentioned that the Korea Development Institute (KDI) recently pointed out that the delivery unit price indexing system may have side effects such as increased consumer cost burden, and said, “It is regrettable that the opposition and opposition parties even reached an agreement with the People’s Livelihood Act. “I cannot agree with (KDI’s opinion),” he said.

Regarding the corporate succession support plan included in the tax reform bill recently announced by the government, it was evaluated as “an innovative plan”, but “if the gift tax payment is deferred or the arrears payment period is extended from the current 5 years to 20 years, the second generation will run the company. I can earn and pay it.”

Chairman Kim suggested the need to extend the maturity of loans and defer interest payments to SMEs as the burden of financial costs for SMEs has increased due to the recent rapid increase in the base rate. He also emphasized the need for a major change in employment and labor policies, such as a flexible 52-hour workweek, improvement of the serious accident punishment law, and expansion of the limit on foreign employment.

According to the ‘Survey on Overcoming the Complex Economic Crisis’ conducted by the Korea Federation of Small and Medium Businesses on 500 small and medium-sized enterprises (SMEs), 65% of the responding companies perceived the recent economic situation as a ‘crisis’. 86.8% expected the current crisis to continue for more than a year. The factors that felt the burden on SMEs were in the following order: a surge in raw material prices (76.6%), an increase in the financial cost (interest) burden (13.5%), a rise in the exchange rate (7.1%), and a deepening manpower shortage (2.8%). In addition, 72.8% of small and medium-sized enterprises (SMEs) answered that they purchase raw materials at a higher price than last year, and only 2.5% of those who reflected the price increase in the unit price of delivery or sales.

Government policies necessary in the face of high prices include △Strengthening support for providing information on raw material prices and supply and demand (67.8%, multiple responses) △Strengthening support for financing and guaranteeing raw material purchases (35.6%) △Promptly enacting a unit price indexation system (33.2%) △Public Procurement Service stockpile raw materials Discount emission (14.0%) was selected.

Jeju = Reporter Kwon Geon-ho [email protected]

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