SME minister nominee vows to keep necessary rules, streamline venture regulations

Lee So-young, the nominee for minister of SMEs and startups, said Friday that regulatory reform should preserve necessary protections while eliminating rules that unfairly hinder the growth of venture companies.

Speaking to reporters after a meeting with Korea Federation of SMEs Chairman Kim Ki-moon at the federation's Yeouido headquarters in Seoul, Lee said regulatory reform does not mean removing every rule indiscriminately. "You cannot take down traffic lights in the name of deregulation," she said, adding that "regulatory reform means keeping the rules that are needed and rationalizing those that are unnecessary and unreasonable."

Lee said the government must distinguish between regulations that protect small and medium-sized enterprises and the self-employed, and those that stifle innovation in the venture sector. "In the SME and small-business space, a certain degree of protection and reasonable regulation is needed to govern the relationship between large companies and smaller ones," she said.

On the venture sector, she said it was "a painful reality in South Korea that regulations act as a fundamental barrier blocking business across many sectors." The core of regulatory reform, she said, is ensuring that "new services and new attempts are not blocked outright by sweeping upfront regulations or punitive after-the-fact rules."

Lee had made similar remarks Monday, her first day reporting to the ministry, saying she would devote her energy to easing regulations with the mindset of a "minister of regulatory reform" rather than simply a minister of SME support. She also referenced the case of Tada, the ride-hailing service that was effectively shut down by regulation, saying such outcomes must not be allowed to repeat.

Lee also said Friday that the role of small and medium-sized enterprises must be spelled out more concretely in the government's "three mega projects," "seven seed projects," and "five-pole, three-special growth strategy." "It is true that national growth strategies have been drawn up around large anchor companies," she said. "For this historic national leap forward to change the lives of all citizens — not just those at a handful of large conglomerates — and to open up opportunities for everyone, the role of SMEs must be made more specific and explicit."

"If I am appointed minister, the Ministry of SMEs and Startups will actively participate in defining that role and work with relevant ministries," Lee said.

The AI transformation gap between large and small companies was also a key topic at the meeting. Lee said there were concerns that the AI adoption rate among large companies is roughly 10 times that of SMEs, and that this gap is widening the so-called K-shaped divide in productivity between large and small firms.

She added that uniform support for AI transition may not be sufficient given that each company has different circumstances and characteristics, and said she was told that "a careful and thorough plan is needed." The meeting also touched on the need to strengthen SMEs' capacity to respond to a changing trade environment, including the EU's Carbon Border Adjustment Mechanism.

Lee said she would also push for additional budget increases for the Ministry of SMEs and Startups during the National Assembly's budget review process next year. "I will work hard to ensure that items that could not be reflected in the government's draft due to timing constraints are included during the supplementary increase process," she said.

Responding to criticism that she had not done enough to sponsor legislation for small businesses, Lee said the laws that directly affect SMEs are spread across all ministries, not just the committee overseeing industry, trade, SMEs and venture affairs. "The fact that I did not sponsor bills under the Ministry of SMEs and Startups' jurisdiction — which mainly covers support policy — does not mean I have not made legislative efforts for small businesses," she said.

She added that she had sponsored and passed an amendment to ease the burden on SMEs in intellectual property disputes, and had led both budget cuts and increases for ministry projects while serving as the ruling party's floor leader on the special budget and accounts committee.