Government to scrap SMEs’ ‘non-competitive contract system’


Despite resistance from small businesses, the government has decided to repeal a controversial protective measure for small- and medium-sized enterprises (SMEs) from as early as next year as part of restructuring efforts.

The Small and Medium Business Administration (SMBA) said that it would revamp the long-running ‘non-competitive contract system’ between state agencies and the Korea Federation of Small Business (KFSB), the nation’s largest organisation representing SMEs and propose a new bill for small business promotion to the National Assembly this autumn.

Under the system, which was created in 1965 to help SMEs secure markets and stabilise management, public agencies have purchased the government-designated products through contracts with the KFSB. The KFSB has allotted received orders to its members according to its own conditions.



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