Seoul to overhaul half of SME support programs, redirect W4tr to high-growth sectors

The government plans to overhaul roughly half of its small and medium-sized enterprise support programs spread across 17 ministries. By merging or cutting overlapping, duplicative and low-performing programs, it aims to free up about 4 trillion won ($2.9 billion) in fiscal room and redirect those funds toward high-potential companies and emerging growth sectors — shifting the focus of SME policy from broad-based handouts to strategic concentration.

According to the Ministry of SMEs and Startups, the government will streamline 232 of the 472 SME support programs currently operated across 17 ministries. Overlapping and duplicative programs will be merged or abolished, while programs with poor results or those that spread small amounts of funding across many companies will be restructured. The fiscal room generated through the exercise is expected to reach about 4 trillion won.

The efficiency drive traces back to President Lee Jae Myung, who said at a dialogue with small business owners in March that SME support programs were "like tangled hair that needs to be combed out."

The key element of the plan is that the 4 trillion won freed up through streamlining will be reinvested in SME policy rather than returned to the general treasury. Funds generated by adjusting existing program budgets will be redistributed during next year's budget formulation process toward high-potential companies and strategic industries.

Park Yong-soon, director general for SME policy at the Ministry of SMEs and Startups, said at a briefing on Wednesday that savings from the streamlining effort would not go back to the national treasury but would instead be used to increase funding for key programs, including the Jump-Up initiative, during next year's budget process. "There are quite a few programs that will see their budgets increased," he said.

The government has identified four strategic growth sectors to receive renewed support: new security, pharmaceutical biotech, climate technology and K-consumer goods.

Starting next year, the Ministry of SMEs and Startups and related ministries will identify 300 innovative companies in these sectors annually. Each selected company will receive a bundled package of support — covering commercialization, financing, exports, workforce and research and development — along with specialized consulting, for up to five years at more than 10 billion won per company. The ministry has allocated 238.8 billion won for this initiative.

In the new security sector, the government will designate strategic fields and innovative companies, then link R&D, demonstration projects and rapid procurement systems to nurture promising firms.

For pharmaceutical biotech, the government will support research and business development as well as biotech funds, and will foster blockbuster-candidate companies through open innovation with domestic pharmaceutical companies and global big pharma.

Climate tech support will include test beds for technology demonstration, innovation-focused R&D and dedicated funds. In the K-consumer goods sector — covering beauty, fashion and food — the government plans to support promising companies from innovative product development through dedicated funds to global market entry.

The Jump-Up program, which helps high-potential SMEs scale up, is another major reinvestment target. Its budget is set to grow to 164.2 billion won next year, an increase of more than 100 billion won.

The restructuring represents a broader shift in how the government supports small businesses — moving away from spreading small amounts of funding widely toward concentrating policy resources on companies with demonstrated growth potential.

Concerns have emerged, however, that overhauling roughly half of all programs could reduce support reaching smaller and more vulnerable businesses. As smaller programs are merged or abolished, companies that previously relied on them could fall through the cracks of the policy net.

The Ministry of SMEs and Startups said the cuts were not made on a uniform basis by budget size or program scale. Director General Park said the government was not simply eliminating all programs below 50 million won or 5 billion won in budget. "We took into account multiple factors within those ranges — poor performance, duplication and others — to determine what to streamline," he said.

Park added that "there are clearly budgets that serve as a foundation for basic resilience," signaling that support programs for financially vulnerable SMEs would not be cut wholesale even as the government expands assistance for growth-stage companies.

The government will incorporate the funds freed up through the restructuring into next year's budget proposal. Which programs will see cuts and which will receive increases is expected to become clearer when the ministry releases its overall budget formulation direction for next year.

Ultimately, the overhaul represents an attempt to redefine the benchmark for SME support policy — from how many programs are run to where resources are concentrated and what results they produce. Whether the 4 trillion won translates into stronger growth companies and a more competitive new-industry sector will determine whether the policy shift succeeds.