Government pushes to fold regional SMEs and Startups office into new integrated city

Officials and industry warn of gaps in support for small businesses and crisis response

Concerns raised over lack of expertise if functions transfer to local government

President Lee Jae Myung greets South Jeolla-Gwangju Special Integrated City Mayor Min Hyeong-bae at the 10th Central-Local Cooperation Council meeting held at Cheong Wa Dae on Aug. 26. Seoul Mayor Oh Se-hoon stands between them. [Yonhap]
President Lee Jae Myung greets South Jeolla-Gwangju Special Integrated City Mayor Min Hyeong-bae at the 10th Central-Local Cooperation Council meeting held at Cheong Wa Dae on Aug. 26. Seoul Mayor Oh Se-hoon stands between them. [Yonhap]

Since the Lee Jae Myung government launched the South Jeolla-Gwangju Special Integrated City in July, a new controversy has emerged: whether to fold the Gwangju-South Jeolla Regional Office of the Ministry of SMEs and Startups into the newly created city. Officials within the Ministry of SMEs and Startups and industry groups warn the move could leave small and medium-sized enterprises and small business owners without adequate support or crisis response.

According to a government document obtained Wednesday outlining a plan to reorganize the functions of special regional administrative agencies in the South Jeolla-Gwangju Special Integrated City, the government is pursuing a transfer of certain duties previously handled by central government agencies at the regional level to the integrated city. Special regional administrative agencies are national bodies established by central ministries to carry out their mandates locally; the Gwangju and South Jeolla area has 599 such agencies affiliated with 23 ministries. The Gwangju-South Jeolla Regional SME Office is one of them.

In the small business sector, functions the regional SME office has long handled — including workforce support, SME policy implementation, traditional markets and small business assistance, venture and startup support, exports, and unfair trade investigations — are among those slated for transfer. The plan to fold the Gwangju-South Jeolla Regional SME Office into the integrated city is being pursued as part of that process.

The Gwangju-South Jeolla Regional SME Office serves as the on-the-ground arm of the central government for local small businesses and self-employed operators. Beyond research and development and export support, it also handles unfair trade investigations and public procurement assistance.

Concerns have been raised that abolishing the office could create a vacuum in SME and small business policy implementation. Critics say policy consistency, enforcement capacity and accountability at the central government level could deteriorate, and that the ability to mount a swift national-level response in the event of a major crisis or disaster could be compromised.

A precedent exists: when Jeju Special Self-Governing Province was established in 2006, some functions and staff of the Jeju Regional SME Office were transferred to the provincial government, and problems stemming from a lack of expertise have persisted ever since. "During COVID-19, the Gwangju-South Jeolla Regional SME Office handled loss compensation payments at Jeju's request, precisely because local governments have inherent expertise limitations due to the rotating assignment system," a Ministry of SMEs and Startups official said.

Within the ministry, concern is growing that the Gwangju-South Jeolla office is the only regional agency being targeted for abolition, unlike counterparts in other ministries. Agencies affiliated with the Ministry of Employment and Labor and the Ministry of Climate, Environment and Energy are set to retain their organizations while transferring only their administrative duties and budgets to the integrated city — whereas the SME ministry's regional office faces outright dissolution.

The status of the office's civil servants is also in dispute. If the Gwangju-South Jeolla Regional SME Office's functions transfer to the integrated city, some national civil servants under the ministry could be reclassified as local government employees. The shift from national to local civil service raises questions about how personnel management, promotion systems and working conditions would be guaranteed.

There are also fears that the dissolution could spread to other regions. If the Gwangju-South Jeolla office is abolished following the 2006 Jeju precedent, other local governments may push for similar transfers of their own regional SME offices. Officials within the ministry warn that such a domino effect could weaken the central government's nationwide SME policy implementation framework.

Industry voices share those concerns. If regional SME offices disappear, businesses in affected areas could face a support gap compared with other regions, and local governments may struggle to immediately take on specialized functions such as unfair trade investigations and research and development work.

"The Gwangju-South Jeolla Regional SME Office was already handling work for Jeju after its office was abolished, and if Gwangju and South Jeolla lose theirs while other regions still have one, local companies will face discrimination," said Kim Hong-seok, an executive at the Inno-Biz Association. "Even for unfair trade work alone, you need specialists who have dealt with disputes for years — if that gets handed to a local government, businesses will inevitably run into serious difficulties."


boo@heraldcorp.com