SMEs pushed to make the leap to create jobsThe government announced a set of measures yesterday to help foster midsized companies, a move which it hopes will help create more than 400,000 new jobs and boost the country’s exports.
In a weekly meeting chaired by President Lee Myung-bak, the government launched a new project that seeks to nearly triple the number of midsized companies to 3,000 by 2015.
A midsized business, by law, is defined as a company with more than 300 but fewer than 1,000 workers and annual sales of between 100 billion won ($88.6 million) and 300 billion won.
As of the end of 2010, there were 1,291 midsized companies in the country, a large boost from about 630 in 2003, but the number still accounts for only 0.04 percent of the total 3.12 million companies here.
“Rearing midsized companies is an indispensable task we face in order to create quality jobs for young people and narrow the widening gap between large and small businesses,” the Ministry of Knowledge Economy said in a press release.
Under the new project, the government will offer various tax incentives, including a deduction on inheritance taxes, and financial support designed to encourage small and medium enterprises (SMEs) to become midsized companies.
This rise in status has long been shunned by businesses as it could strip them of benefits offered only to SMEs without making them eligible for perks available to large conglomerates.
Currently, companies with less than an average of 150 billion won in annual sales are subject to a 70 percent deduction on inheritance taxes.
The government will raise the ceiling to 200 billion won next year in an attempt to encourage companies to expand their businesses and also encourage owners to build their companies into long-lasting family businesses.
In addition, the government will offer expanded tax breaks for research and development activities by midsized firms, while expanding the total amount of loans with preferential interest rates to midsized companies from 8.2 trillion won to 9 trillion won.
“The main purpose of the project is to create new jobs,” said Yoon Sang-jik, a vice minister of knowledge economy, at a press briefing on Wednesday.
“It is also a move to strengthen a key group of companies in our business ecosystem.”
The vice minister said the number of jobs at midsized companies will increase from 800,000 to at least 1.2 million when the number of such companies increases to 3,000 in 2015.
More in Finance
Dollar's weakness pushes won to 30-month high
Kospi hits another high on chipmaker optimism
Eight companies agree to share credit card data
Loans to self-employed grow at slower pace in third quarter
Credit card payments in Korea rise in October on year