South Korea Lowers Bar for Establishing SME Cooperatives with New Law

South Korea's National Assembly has passed a crucial amendment to the SME Cooperatives Act, a move expected to significantly ease the process of establishing SME cooperatives. This legislative change, championed by Representative Park Sang-woong of the People Power Party, addresses long-standing barriers faced by small and medium-sized enterprises seeking to form cooperative bodies.

The core of the amendment lies in the substantial reduction of the minimum number of founding members required. For national-level cooperatives, this threshold will drop from 50 to 30 individuals or entities. Similarly, regional cooperatives will now need only 20 founders, down from the previous requirement of 30. This adjustment is designed to foster greater collaboration and collective bargaining power among SMEs, which are the backbone of the South Korean economy.

From the perspective of South Korean SMEs, this is a welcome development. The Korea Federation of SMEs (KBIZ) has long advocated for such reforms, recognizing that the high founding member requirement often deterred the formation of new cooperatives. By lowering this barrier, the government aims to encourage more SMEs to pool resources, share risks, and achieve economies of scale, ultimately enhancing their competitiveness both domestically and internationally. This policy reflects a commitment to supporting the SME sector, which plays a vital role in job creation and economic stability in South Korea.