The total amount of products purchased by public institutions from small and medium-sized enterprises in 2024 reached an all-time high.
The Ministry of SMEs and Startups (Minister Oh Young-joo, hereinafter referred to as the Ministry of SMEs and Startups) announced at a Cabinet meeting on April 29 that the amount of public institutions’ purchases of SME products in 2024 will reach 131 trillion won (original plan: 119.1 trillion won). This is the largest purchase amount since the implementation of the public procurement system (2006).
According to Article 5 of the Act on Promotion of Purchase of Small and Medium Enterprise Products and Support for Distribution Channels (hereinafter referred to as the Distribution Channel Support Act), individual public institutions must purchase at least 50% of their total purchase amount from small and medium enterprise products.
The Ministry of SMEs and Startups is encouraging efforts by selecting institutions subject to public procurement surveys that have a purchase ratio of SME products of 85% or higher and purchase amounts of SME products of 300 billion won or more as ‘Excellent Institutions for Purchasing SME Products’.
In 2024, 20 organizations were selected, including Gyeonggi Housing and Urban Development Corporation, Daejeon Metropolitan Office of Education, Yongin City, Gyeonggi Province, and the Ministry of Education.
In particular, among these organizations, Gyeonggi Housing & Urban Development Corporation recorded the best performance, with purchases of small and medium-sized enterprise products amounting to 469.3 billion won (94.7%) out of a total purchase amount of 495.3 billion won, an increase of approximately 257 billion won (↑121%) from 2023's 212.3 billion won.
Meanwhile, the total purchase target amount for SME products in 2025 submitted by 846 public institutions subject to the Distribution Channel Support Act is approximately KRW 119.5 trillion. This is approximately 75% of the total purchase amount (KRW 160.1 trillion) of the relevant institutions, and considering that the statutory purchase target ratio for SME products is 50%, it appears that the public purchase target ratio system is effective in leading SMEs to develop public sales channels.
The Ministry of SMEs and Startups plans to make every effort in policy to ensure that the public procurement system can serve as a pillar of securing public sales channels for SMEs in 2025 as well. First, it plans to induce the purchase of SME products through public procurement system briefing sessions and purchase promotion exchange meetings for public institutions, and actively support the achievement of the goals of public institutions by checking the performance of public institutions through on-site surveys and encouraging purchases by institutions with low purchase amounts.
Lee Soon-bae, Director General for Global Growth Policy, said, “Due to the difficult economic situation with high prices and high interest rates and the global trend of strengthening protectionism, the performance of public procurement has served as a support for securing sales channels and increasing sales for small and medium-sized enterprises in a situation where the economy is not easy. We will actively cooperate with public institutions in 2025 as well to ensure that the public procurement plan is implemented without a hitch and to play a bigger role in securing sales channels.”
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