ASEAN-Korea Financial Cooperation Centre

Financial Cooperation Note Series Vol. 6

One-Stop Support System for Small Business Policy Funding

Contents

1. Status of SMEs in Korea

2. Overview of KOSME

3. Roles of KOSME

4. Performance of KOSME in 2022

5. Key Takeaways

Introduction

Small and medium-sized enterprises (SMEs) and startups serve as crucial pillars of the national economy, contributing significantly to sustained economic growth and job creation through their innovative technologies and ideas. Particularly noteworthy the Republic of Korea had 7.738 million SMEs as of 2021, marking an increase of 42,813 over the previous year.

SMEs comprise up to 99.9% of all businesses, underscoring their pivotal role as the primary backbone of the Korean economy. However, the business sector is facing challenges due to the global economic landscape, grappling with difficulties in securing loans and other financial support for operational needs, alongside labor shortages. The factors that are intensifying the financial burdens of the SMEs are China’s economic slowdown, subsequent decrease in exports to China, increased interest rates following the U.S. benchmark rate hike, inflation, and currency fluctuations. In 2023, SMEs encountered increased business uncertainties stemming from the disruption in supply chains and surge in oil prices triggered by the Russia-Ukraine war.

This article aims to explain the vital role played by the Korea SMEs and Startups Agency (KOSME) in supporting SMEs.

ASEAN-ROK Financial Cooperation Centre