The Korea Credit Guarantee Fund (KODIT) will actively support small and medium-sized enterprises (SMEs) this year through its extension of credit guarantees, the top official of KODIT said.
“Mainly because of protracted global economic slowdown and the opaque economic prospects for the Korean economy, the nation’s SMEs are expected to face serious difficulties this year,” said Ahn Taik-soo, chairman & CEO of KODIT.
“Accordingly, KODIT will double its efforts to extend more financial supports to SMEs this year to help them reinvigorate their strength and bolster their competitiveness,” he said.
“We will keep the total volume of credit guarantees at a level of KRW 45 trillion in 2012. In particular, we will expand general credit guarantees by KRW 1 trillion to KRW 38.5 trillion,” said the head of KODIT.
"Along with this, we will persistently strengthen financial supports to expand future growth engines and reduce unemployment by increasing extension of credit guarantees for main policies by KRW 2.1 trillion to KRW 15.2 trillion. The credit guarantees for job creation will be raised by KRW 900 billion to KRW 13.4 trillion this year", he explained.
“As for marginal companies which have lost competitiveness, KODIT will phase out its extension of credit guarantees to them through a restructuring program in an effort to enhance efficiency of its limited guarantee resources,” said Ahn.
“In addition, we will place the emphasis on improvement of various systems and credit guarantee services by reflecting voices directly from SMEs. First of all, we introduced the ‘comprehensive credit ceiling guarantee,’ which allows SME customers to freely select financial products according to their needs, in January this year,” said the top executive.
KODIT also plans to introduce the “corporate doctor system” comprising of corporate experts to provide SME owners with managerial consultation services.
At the same time, it plans to build a “special center for rollover” to help SME customers extend the term of credit guarantees without making a direct visit to KODIT office.
KODIT's future vision for 2020
To effectively cope with rapidly changing macro-environment, KODIT established the “KODIT’s future vision 2020,” a mid- and long-term future strategy for growth and development of SMEs, in December last year.
The vision is designed to strengthen its policy executions and offer differentiated customer services, Ahn said.
“We have been pushing ahead with a two-track policy for guaranteed assistance. We strengthen supports for enterprises with high growth potential in the future. At the same time, we will also guarantee by implementing restructuring programs for troubled companies,” said the KODIT head.
Through the future vision 2020, KODIT has set “value creator, guiding to a happy world for enterprises” as its new mid and long-term vision.
“It indicates that KODIT has set an 'environment where enterprises can engage in business easily, and a society where enterprises can have a brighter future as the top value. It also means that KODIT will escape from a simple guarantee supplier and push for becoming a creator of customer value and helping enterprises’ grow,” he said.
To achieve this new vision, KODIT plans to find and actively nurture 2,000 global SMEs by 2020 as part of its efforts to build a strong backbone of the national economy.
It is also moving to bolster tailor-made corporate assistance by expanding credit guarantees to successful companies and developing 20 new products.
“On a short-term basis, it will strengthen KODIT’s policy function to expand financial assistance for new growth engine industries and other sectors which are facing difficulties in getting financial services. On a long-term basis, it will push ahead with diversified strategies related to credit guarantee, including expansion of a new business arena and enhance the autonomy of its operation,” said the top manager.
“In addition, we will build an effective system supporting SMEs through drastic reform of personnel and business process,” he noted.
KODIT Star 100 Project
To attain the government’s policy of fostering mid-tier enterprises, KODIT is actively propelling the “KODIT Star 100 Project,” under which it selects and actively foster 100 “tomorrow’s giants” by 2015.
Under the project, KODIT will select SMEs with favorable future corporate value, global competitiveness, managerial ability and financial stability, and develop them into global mid-tier companies by 2015 through persistent managerial reform activities.
Those selected as tomorrow’s giants will be able to receive benefits such as the two-year establishment of credit line for operational funds, application of the lowest guarantee fee rate of 0.5 percent for six years, and various consulting assistance.
“For sustainable growth of the national economy, KODIT will continue to find promising SMEs and develop them into global mid-tier companies by fully extending financial supports and other benefits" said Ahn.
Knowledge Sharing Program
KODIT plans to improve its global leadership continuously through expansion of the overseas transfer of its advanced credit guarantee system, active participation in international conferences and bolstering of its global networks with relevant foreign institutions.
“First of all, we will strengthen international consultation activities by expanding the ‘Knowledge Sharing Program’ to other countries, including Combodia, in addition to Vietnam and Kazakhstan,” said Ahn.
Since 2007, KODIT has been implementing the program to transfer its tailor-made guarantee system to developing counties. It carried out the program for Vietnam in 2007 to help the country settle down the advanced guarantee system at an early date.
KODIT also shared its guarantee system with Cambodia in 2010 and Kazakhstan in 2011.
2011 Credit Guarantee Performance
KODIT extended credit guarantees totaling KRW 45.1 trillion won in 2011, the same as the previous year, to effectively back up the Korean economy, which ranked ninth in the world in terms of trade volume standing at USD 1 trillion, despite the European financial crisis.
“In particular, KODIT increased its credit guarantees for exporting companies, eco-friendly industries and promising service industries by 18.5 percent from a year ago to KRW 17.9 trillion won last year,” he said.
As market interest rates have been on a steadily rising, SMEs are suffering from heavy financial burdens. The increase in SMEs’ burden on financial costs is feared to lead to worsening of profitability, credit crunch, a rise in debts, and further increase in financial costs, drawing a vicious circle.
“To rectify such a vicious circle, KODIT built an online loan marketplace at its homepage last January. Under the system, enterprises can exchange lending information with banks and select a bank that offers the most favorable condition,” he explained.
“Thanks to the introduction of the online loan marketplace, the average interest rate for enterprises using the system dropped by 0.53 percentage points to 5.69 percent per annum,” he commented.
In 2011, meanwhile, KODIT created 73,000 jobs by extending credit guarantees to some 20,000 start-ups, including 11,700 start-ups led by youths.
In addition, it extended KRW 4.1 trillion in credit guarantees to enterprises creating jobs last year, greatly contributing to making a total of 32,000 jobs, he added.