Kim Jin-pyo Criticizes Government's Reduced Support for SMEs

Kim Jin-pyo, Supreme Council member of the Democratic Party (Yeongdong, Suwon), strongly criticized the government's SME measures at the 'Supreme Council-Chungbuk Regional Committee Joint Meeting' held in Chungju on the 12th, stating, "The government is implementing an exit strategy starting with small and medium-sized enterprises, cutting the budget for SME support for two consecutive years."

According to an analysis by the Democratic Party's Policy Committee, the budget for the "industry, SMEs, and energy" sector, which saw a 6.7% cut this year, will face another 3.5% reduction next year (15.1 trillion won → 14.6 trillion won).

Kim noted, "Even to solve the employment problem, we must support SMEs, yet the Lee Myung-bak government is increasing next year's budget for the Four Major Rivers project by 15.4% while cutting the Small and Medium Business Administration budget by 9.1% compared to this year," arguing that the government is neglecting small businesses.

Furthermore, on the 8th, the Financial and Monetary Committee of the Bank of Korea raised the benchmark interest rate from 2.0% to 2.25%, implementing an exit strategy to prepare for rising prices. Kim pointed out that SMEs, which are experiencing greater financial difficulties than large corporations, are expected to face a bigger blow.

According to data from the Financial Supervisory Service, as of end-May, the loan delinquency rate of large corporations stands at 0.68%, down 0.53% compared to January, while the delinquency rate for SMEs is 1.88%, up 0.41 percentage points during the same period.

Kim noted that with the expiration of the government's expanded guarantee and maturity extension measures for SMEs at the end of June, and the Bank of Korea's total lending limit decreasing from 10 trillion won to 8.5 trillion won starting this month, the financial situation of SMEs is expected to deteriorate.

He stated, "This is evidence that the government is making small and medium-sized enterprises the scapegoat in the so-called 'exit strategy,' increasing the Four Major Rivers budget by 15.4% while reducing government support. Meanwhile, it is maintaining tax cut support policies for large corporations, deepening the polarization between large corporations and SMEs."