Prime Minister Han Seong-sook speaks at a Cabinet meeting held at Government Complex Sejong on Tuesday. [Yonhap]
Prime Minister Han Seong-sook speaks at a Cabinet meeting held at Government Complex Sejong on Tuesday. [Yonhap]

Forum on SME, venture and startup deregulation draws PM Han, 10 ministries

Kim Ki-moon: Market volatility driving down market caps, putting firms at delisting risk regardless of fundamentals

Proposals cover construction materials procurement, regulatory sandbox, AI data rules

South Korea's small and medium-sized enterprise lobby called on Prime Minister Han Seong-sook to ease and delay enforcement of tightened Kosdaq delisting standards that took effect in July, warning that market volatility could push financially sound companies off the exchange simply because their share prices or market capitalizations have fallen below the new thresholds.

The Korea Federation of SMEs hosted a deregulation forum for small and medium-sized enterprises, venture firms and startups on Wednesday at its KBIZ Hall in Yeouido, Seoul. Prime Minister Han, officials from 10 related ministries including the Financial Services Commission and the Personal Information Protection Commission, and about 100 SME representatives attended. Han took office July 1.

Korea Federation of SMEs Chairman Kim Ki-moon put forward two priority proposals at the forum: revising the Kosdaq delisting requirements and reforming the separate-bidding system for construction materials at public institutions.

"Since July 1, the Kosdaq delisting requirements have been tightened, but the recent sharp volatility in the Kosdaq market has put small and medium-sized companies at risk of delisting — not because of their earnings or financial condition, but because their market caps have fallen or their shares have become penny stocks," Kim said. "For SMEs hit hard by market volatility, we need to separate the wheat from the chaff and put in place the necessary relief measures."

The federation argued that the stricter delisting criteria could increase the burden on listed SMEs based on share price swings rather than underlying business fundamentals. While it supports the capital market policy direction of swiftly removing insolvent companies, it contended that applying the same standard to firms experiencing only a temporary drop in share price or market cap requires further refinement.

The separate-bidding requirement for construction materials at public institutions was also raised as a deregulation priority. "In the case of Korea Land and Housing Corp. private-participation projects, the law on market access support already requires direct purchases of SME products — but differing views between ministries have prevented separate bidding from happening," Kim said. "The survival of small and medium-sized manufacturers producing more than 360 categories of construction materials is at stake, so we hope a swift revision of the relevant notice will allow SMEs to do business directly with public institutions."

The forum was organized into three sessions: regulatory issues arising from new industries, regulatory improvements to support SME growth, and sector-specific proposals.

In the new industries session, proposals included improvements to the regulatory sandbox system, the establishment of laws and systems governing the digital asset industry, a review of data regulations for AI development, and the creation of a body to mediate conflicts of interest between new and legacy industries.

In the SME growth session, participants called for easing entry and exit regulations in the Kosdaq market, improving lock-up practices for newly listed companies, relaxing restrictions on the types of businesses allowed in regional industrial complexes, expanding SME participation in large-scale projects, introducing a price-linkage system for government procurement contracts, and adjusting industrial safety and health management fee standards to reflect actual costs.

On-the-ground regulatory proposals included measures to revitalize small manufacturers of construction materials, a plan to exclude the pregnancy and childbirth period of female CEOs from the seven-year business age limit for startup support eligibility, an expansion of vehicle types available to small business owners through car rental services, the application of tariff-rate quotas on soybeans for food use, and improvements to the inventory management system of the Korea Agro-Fisheries and Food Trade Corp. Twenty-five additional regulatory reform items that could not be discussed at the forum were submitted separately to the government.

"While the economy is booming — led by the semiconductor sector, with first-half exports hitting a record high and large conglomerates posting all-time profits — SMEs are seeing their loan delinquency rates at the highest level since 2015, and supplier SMEs are not sharing in those gains," Kim said. "Regulatory reform is the best way for the government to support small businesses without spending a single won in the budget, which is why we need active deregulation."


hong@heraldcorp.com