[EDITORIALS]Aid small businesses

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[EDITORIALS]Aid small businesses

The prediction that this year’s economic growth rate will reach the 5 percent range, higher than earlier estimates, is gaining momentum. But the difficulties of small and medium businesses are becoming more serious as time passes. It is only export industries that are enjoying favorable conditions. Since domestic consumption is still in the doldrums, small businesses that rely mainly on domestic consumption are suffering.
It is unnecessary to emphasize the importance of small and medium businesses. These businesses provide 75 percent of the job opportunities in the manufacturing sector. Without the support of small and medium businesses, multinational conglomerates cannot be developed. In an economic structure where small and mid-sized businesses cannot run their businesses actively, the economy cannot grow consistently.
The crisis theory of small and medium businesses is nothing new. But the situation is a little different this time. Since big businesses have not borrowed money from banks in the last two to three years, the banks have increased their loans to small businesses. As a result, total bank loans to these businesses increased to 236 trillion won ($204 billion) as of the end of last year, and the amount maturing this year amounts to 160 trillion won. The difficulties of small and medium businesses have only grown, since the economy has not revived, while their debts have increased to enormous amounts. Nowadays, people even worry about a financial crisis caused by the insolvencies of small and medium businesses.
It is time for the government and financial institutions to work out a plan to restructure small and medium businesses rapidly. For the banks, it might be difficult to provide unlimited support to small businesses that are likely to become insolvent. But banks must give active support to small businesses that can survive by providing management guidance. In particular, businesses that are suffering from temporary financial difficulties should not be allowed to go bankrupt. Financial companies thus can reduce the amount of insolvent loans. At the same time, they should strictly classify companies that cannot survive so that they can minimize their own damage.
The government must find the means to provide practical support to small businesses. It must provide a system to determine and resolve companies’ financial difficulties as well as manpower and raw material shortages. There is no hope in a country where the number of people who volunteer to run small businesses decreases.
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