The Ministry of SMEs and Startups will create an "emergency logistics voucher" and strengthen financial support for export small and midsize businesses that are facing disruptions in logistics and payment settlements due to rising tensions in the Middle East.
The Ministry of SMEs and Startups (MSS) said on the 6th that it held a "meeting to assess the impact of the Middle East situation on small and midsize businesses," chaired by Minister Han Seong-sook and joined by related associations and groups, and discussed identifying damage to export small and midsize businesses and support measures.
The Ministry of SMEs and Startups (MSS) received reports of damage and difficulties from Middle East export corporations last month. As a result, 64 out of those surveyed 80 corporations were found to have already suffered damage or to be in a worrying situation.
The most significant type of damage cited was "transportation disruption (71.0%)." It was followed by unpaid receivables (38.7%), increased logistics expenses (29.0%), business trip disruptions (16.1%), and deferred contracts (12.9%). These stemmed from airspace closures, restrictions on passage through the Strait of Hormuz, cancellations of Middle Eastern buyers' visits to Korea, and higher shipment export insurance expenses.
Major concerns raised included fears of transportation disruptions if the situation is prolonged (66.7%) and difficulty in assessing damages due to loss of contact with buyers (15.2%).
To reduce damages to small and midsize businesses, the Ministry of SMEs and Startups (MSS) decided to establish an "emergency logistics voucher" tailored to the Middle East region. It will raise the cap on logistics expenses and proceed with procedures for expedited support going forward.
It will also push financial support such as emergency management stabilization funds and guarantee supply. In addition, to help corporations whose import expenses for raw and subsidiary materials have surged due to the recent strong dollar, it plans to implement a "preemptive special maturity extension" within this month. For corporations with a high proportion of raw and subsidiary materials imports, the principal grace period on small and midsize business policy fund loans will be extended by one year.
It will also prepare for the possibility that the Middle East situation will be prolonged. It plans to operate a "strategic export consortium" for corporations highly dependent on the Middle East and support participation in on-site consultations and exhibitions to develop alternative markets.
Oh Ki-ung, executive vice chair of KBIZ, who attended the meeting, said, "If exports to the Middle East are suspended, there is concern it could lead to a deterioration in corporations' cash flow and business environment."
Minister Han Seong-sook of the Ministry of SMEs and Startups (MSS) said, "We will monitor in real time the damages and difficulties of small and midsize businesses related to the Middle East situation and support tailored measures with a strong sense of impact that reflect voices from the field," adding, "We will promptly prepare and push the 'emergency logistics voucher' and the 'special maturity extension of policy funds' for corporations facing management difficulties due to the strong dollar."