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News Briefing
Corporate Growth Ladder Establishment Plan
Jul 2024
The Korean government announced the “Corporate Growth Ladder Establishment Plan” on June 3. This plan, the first of a series of measures aimed at restoring economic dynamism, focuses on promoting the growth of small and medium-sized enterprises (SMEs) into middle market enterprises. 

Above all, support for companies graduating from SME status will be expanded. The graduation grace period during which SMEs are eligible for tax benefits even after growing into the middle market enterprises will be extended from three years to five years. In addition, SMEs listed on KOSPI or KOSDAQ will be granted an additional two-year grace period, allowing for the benefits for up to seven years in total. For enterprises that have grown into middle market enterprises after the grace period, higher R&D and investment tax credit rates will be applied for the first three years to support their growth.

A new program, tentatively named the “Growth Ladder Jump-Up Program”, will be established to select and support 100 promising SMEs for three years. A network of private sector experts, including former business 
executives and private investment institutions (VCs, CVCs, etc.) will be formed, and dedicated directors will be matched to these enterprises to develop customized scaleup strategies. The program will provide vouchers for a wide range of consulting services for corporate growth and the selected companies will be offered existing government support programs in areas such as exports and R&D.

To address the challenges to SMEs’ growth and to assist their entry into new markets and businesses, the program will also provide specialized financial support. SMEs currently using policy finance will be subject to low-interest loans dedicated for middle market enterprises (6 trillion won from the Korea Development Bank and commercial banks) and funds (5 trillion won from commercial banks and the private sector). In 2025, the government will supply 600 billion won in Primary Collateralized Bond Obligations (P-CBO) and 500 billion won in guarantees to promote promising SMEs. In 2024, a 50 billion won fund jointly invested by the fund of funds and Corporate Venture Capital (CVC) will be set up under the Tech Investor Program for Scale-up (TIPS) program to enhance R&D support for companies attracting private investment. 

Furthermore, starting in 2025, the government will launch a dedicated M&A center in the Korean Technology Finance Corporation (KOTEC) and give assistance to enterprises to enter new business areas in collaboration with the Industrial Bank of Korea’s M&A platform. Incentives under the family business inheritance tax deduction system will be considered for high growth companies with investment growth rates above a certain level. 

Last but not least, infrastructure utilizing public information will be strengthened. Technology evaluation information held by KOTEC and financial analysis information held by Korea Credit Information Services will be made available to private financial institutions. In order to improve access to policy finance, a unified policy finance platform will be developed by 2025.

Starting with this measure, the government plans to sequentially prepare policies for building a growth ladder and creating an innovative ecosystem, including ‘Industrial-specific Scale-up Measures’ and ‘Venture Investment Stimulation Plans’. These initiatives will be continuously reviewed and improved in line with efforts to strengthen the Korean economy’s dynamism.