SME minister to push for pension funds to invest in startups – Korea JoongAng Daily

Report on the Ministry of SMEs and Startups’ Strategic Plan for Economic Growth and Sustainable Development

Introduction: A Four-Pillar Strategy Aligned with Global Goals

The Republic of Korea’s Ministry of SMEs and Startups has announced a comprehensive strategic initiative, termed the “Again Venture Boom,” aimed at bolstering the national economy. Minister Han Seong-sook outlined the plan, which is structured around four key policy directions. This strategy directly supports the achievement of several United Nations Sustainable Development Goals (SDGs), particularly those focused on economic growth, innovation, and partnership.

1. Revitalizing venture investment
2. Scaling up small- and medium-sized enterprises (SMEs)
3. Supporting small business recovery
4. Building a connected corporate ecosystem

Fostering Decent Work and Economic Growth (SDG 8)

A central component of the strategy is to expand the venture investment market to 40 trillion won. This initiative is designed to stimulate economic activity and create high-quality employment opportunities, directly contributing to SDG 8.

• Pension Fund Investment: The Ministry proposes allowing pension and retirement funds to invest in venture capital, a measure intended to unlock significant private capital for the startup ecosystem.
• Small Business Support: A one-stop support system will be established for small business owners experiencing financial distress. By monitoring 3 million business owners and providing customized policy financing, the government aims to preserve livelihoods and ensure the stability of small enterprises, which are crucial for local economies and decent work.

Promoting Industry, Innovation, and Infrastructure (SDG 9)

The Ministry’s plan places significant emphasis on fostering innovation and upgrading industrial infrastructure, which are core targets of SDG 9.

• Startup Incubation: A key objective is to nurture approximately 6,000 promising startups annually, creating a robust pipeline of innovative enterprises.
• R&D Commercialization: A record 2.2 trillion won has been allocated for SME research and development. The strategy prioritizes “R&D that makes money” by supporting the entire process from feasibility review to commercialization, thereby enhancing the technological capabilities of the industrial sector.
• Digital and AI Transformation: The plan includes the distribution of 12,000 AI-based smart factories. This initiative will accelerate the adoption of advanced technologies, promoting sustainable industrialization by helping traditional manufacturers digitize and high-tech firms integrate AI.

Strengthening Partnerships for the Goals (SDG 17)

The strategy underscores the importance of collaboration across the entire business landscape, reflecting the principles of SDG 17, which calls for multi-stakeholder partnerships to achieve sustainable development.

• Connected Corporate Ecosystem: The Ministry aims to create an ecosystem that facilitates partnerships between conglomerates, SMEs, startups, and small businesses.
• Technology Integration: A specific goal is to build partnerships where innovative technologies developed by startups can be integrated into products manufactured by major corporations, fostering a symbiotic relationship that drives progress and shared growth.

Analysis of the Article in Relation to Sustainable Development Goals (SDGs)

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 8: Decent Work and Economic Growth
   • The article focuses heavily on fostering economic growth by revitalizing the venture investment market, scaling up Small and Medium-sized Enterprises (SMEs), and supporting small businesses. These actions are central to creating productive employment and sustainable economic growth. The plan to “nurture about 6,000 promising startups each year” directly contributes to entrepreneurship and job creation.
2. SDG 9: Industry, Innovation, and Infrastructure
   • The ministry’s strategy emphasizes technological upgrading and innovation. Specific plans include allocating a record 2.2 trillion won for SME research and development (R&D), promoting a “digital and AI transformation,” and distributing “12,000 AI-based smart factories.” These initiatives aim to build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.
3. SDG 17: Partnerships for the Goals
   • The article highlights the importance of collaboration. The plan to allow pension funds to invest in venture capital is a form of public-private partnership to mobilize financial resources. Furthermore, the goal to create an “ecosystem that connects conglomerates, SMEs, startups and small businesses” directly supports the idea of multi-stakeholder partnerships to achieve sustainable development.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Under SDG 8: Decent Work and Economic Growth
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The plan to promote a “digital and AI transformation” and distribute AI-based smart factories directly supports technological upgrading for increased productivity.
   • Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises. The entire policy direction, including revitalizing venture investment, scaling up SMEs, and nurturing 6,000 startups annually, aligns with this target.
2. Under SDG 9: Industry, Innovation, and Infrastructure
   • Target 9.3: Increase the access of small-scale industrial and other enterprises… to financial services, including affordable credit, and their integration into value chains and markets. The initiative to expand the venture investment market to 40 trillion won and allow pension funds to invest directly addresses increasing access to financial services for startups and SMEs.
   • Target 9.5: Enhance scientific research, upgrade the technological capabilities of industrial sectors… encouraging innovation and substantially increasing… public and private research and development spending. The government’s allocation of a “record 2.2 trillion won for SME research and development” is a direct implementation of this target.
3. Under SDG 17: Partnerships for the Goals
   • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships. The proposal to allow pension funds to invest in venture capital represents a public-private partnership to mobilize finance. The strategy to build partnerships where “startup technologies can be integrated into products made by major corporations” is another example of fostering multi-stakeholder collaboration.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Financial Investment and Market Size
   • The goal to expand the country’s venture investment market to 40 trillion won serves as a clear financial indicator for Target 9.3 (access to financial services).
2. Support for Entrepreneurship and SMEs
   • The plan to nurture about 6,000 promising startups each year is a quantifiable indicator for Target 8.3 (promoting entrepreneurship and SME growth).
   • The allocation of 2.2 trillion won for SME R&D, with 1.1 trillion won for market-validated startups, is a specific financial indicator for Target 9.5 (increasing R&D spending).
3. Technological Upgrading
   • The plan to distribute 12,000 AI-based smart factories is a concrete indicator for measuring progress towards Target 8.2 (technological upgrading).
4. Support for Small Businesses
   • The continuous monitoring of 3 million small business owners with existing loans is an indicator of the scale of the support system designed to help them recover from financial distress, relevant to Target 8.3.

4. Summary Table of SDGs, Targets, and Indicators

Source: koreajoongangdaily.joins.com