An analysis said Korea needs to prepare for a prolonged Middle East war by stabilizing the supply of raw and subsidiary materials for small and midsize enterprises and diversifying export markets.
Korea SMEs & Startups Institute (KOSI) on the 26th released a report titled "The impact of the Middle East war on small and midsize enterprises and implications." According to the report, the share of small and midsize enterprises' imports from the Middle East is 0.7%, a generally low level overall. However, some key raw and subsidiary materials—such as naphtha, aluminum waste and scrap, and unwrought nonalloy aluminum—show a high import share from the Middle East. In particular, as of 2024, 82.8% of naphtha imports rely on the Middle East, including Kuwait, the UAE, and Qatar, raising concerns that supply instability could worsen if the war drags on.
On the export side, the share of small and midsize enterprises' exports to the Middle East is 5.4%, higher than the average for all corporations (2.9%), suggesting the war's impact could be relatively larger. The number of small and midsize exporters to the Middle East was 13,859, accounting for 14.2% of all exporting small and midsize enterprises. Among the top 15 export items of small and midsize enterprises, those with a high share to the Middle East included cosmetics, used cars, auto parts, and plates, sheets, and strips of gold.
It was found that transaction risks are growing, including higher expense burdens due to rising oil prices, logistics costs, and exchange rates; order adjustments by Middle Eastern local partner companies of small and midsize enterprises; transaction fluctuations and cancellations; payment delays; and shipping delays. Weak domestic demand making it difficult to reflect higher costs in supply prices was also cited as a factor adding to the burden on small and midsize enterprises.
Shin Min-i, associate research fellow at Korea SMEs & Startups Institute (KOSI), said, "To prepare for a prolonged Middle East war, it is necessary to proactively strengthen support to stabilize the supply of raw and subsidiary materials for small and midsize enterprises and diversify export markets," adding, "On the supply side, we should consider strategic stockpiling, establishing priority supply cooperation systems, and securing alternative suppliers, and on the export side, we should consider supporting entry into new markets such as the Global South."