Local Governments Raise Preferential Procurement Threshold for SMEs to Up to 350 Million Won

[Financial News] The threshold for preferential procurement contracts for small and medium-sized enterprises by local governments and local public corporations will be raised to a maximum of 350 million won.
 According to the Ministry of SMEs and Startups on the 22nd, an amendment to the Act on the Promotion of Purchase of Small and Medium Enterprise Products and Support for Market Access (Market Access Support Act) containing these provisions was approved at a State Council of South Korea meeting that day. 
 Until now, local governments and local public corporations have been subject to the Act on Contracts to Which a Local Government Is a Party (Local Government Contracts Act), while the announced threshold for preferential procurement contracts for SMEs was based on the Act on Contracts to Which the State Is a Party (State Contracts Act).
 As a result, the lower threshold under the State Contracts Act was applied instead of the higher threshold announced under the Local Government Contracts Act, limiting the scope for SMEs to participate in preferential procurement.
 The government amended the law so that the announced threshold for preferential procurement contracts can vary according to the contract law applicable to each institution, in line with the local government commitments under the World Trade Organization (WTO) Government Procurement Agreement.
 Accordingly, the threshold for preferential procurement contracts for SMEs at institutions subject to the Local Government Contracts Act will rise from the current maximum of 230 million won to 350 million won. The amendment will take effect in December.
 Shim Jae-yoon, Director General for Global Growth Policy at the Ministry of SMEs and Startups, said, "Public procurement is a strong stepping stone for SMEs to build initial sales and delivery records. We will use this amendment as an opportunity to improve the system so that more SMEs can establish a foundation for growth in the procurement market." 
[email protected] Kim Hyun-cheol Reporter