Small business federation welcomes Lee Hyung-il as deputy PM, urges relief for struggling economy

The Korea Federation of Small and Medium Business welcomed the appointment of Lee Hyung-il as the new deputy prime minister and minister of economy and finance on Wednesday, calling on the new economic team to "breathe warmth into a frozen real economy." The federation also urged measures to revive domestic demand, provide tax support, extend loan maturities and expand low-interest refinancing for small business owners.

In a statement released Wednesday, the federation said Lee is "a seasoned economic official whose broad macroeconomic vision and policy execution have been proven," adding that it expects him to draw on his expertise and leadership in shaping major economic policies — including economic policy directions and domestic demand stimulus measures — to chart a new path for small business owners pushed to the brink by prolonged domestic stagnation and a high-cost structure.

The federation said the environment facing neighborhood commercial districts and the small business ecosystem is more desperate than ever. Businesses are battered by a combination of prolonged high prices, high interest rates, weakening consumer spending and rising costs, compounded by the aggressive expansion of large online platforms, unfair trade practices and rapid structural shifts in industry.

"We urge the new economic team, led by Deputy Prime Minister Lee Hyung-il, to take these desperate voices from the field seriously and devote full policy effort to restoring the livelihoods economy that is directly tied to the survival of small business owners," the federation said.

The federation also recalled remarks Lee made when he visited its offices as a nominee. On Sept. 7, Lee visited the federation before his confirmation and said, "Supporting the management stability and growth of small business owners is crucial to easing economic polarization," pledging to "make every policy effort to ensure that the warmth of growth reaches all small business owners."

The federation identified domestic demand recovery as the new economic team's top priority. "The foremost task of the Lee economic team is to breathe warmth into a frozen real economy," it said, calling for comprehensive consumption stimulus measures and tax support to channel funds into local economies, including neighborhood commercial districts and traditional markets.

On taxation, the federation urged the government to pay close attention to tax support measures for small businesses, including maintaining the preferential value-added tax deduction rate of 1.3 percent on credit card sales and the 10 million won ($7,350) cap, as well as raising the threshold for simplified taxation — proposals the federation has previously submitted to the government.

The federation also said that building a proactive financial safety net for small businesses in distress — through loan maturity extensions, expanded low-interest refinancing and tailored debt restructuring — is an indispensable task, as is establishing a social safety net to help struggling micro-merchants exit the market smoothly.

"Deputy Prime Minister Lee has long been regarded as a macroeconomic expert who has handled the full breadth of the real economy, and we trust he will untangle the current economic knots with speed," the federation said, adding that it would actively cooperate with the government's efforts to restore the livelihoods economy and work to protect the rights and economic independence of small business owners.