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Korea's SME federation asks lawmakers to halve supplier payment deadlines to 30 days
The Korea Federation of SMEs wants subcontracting and mutual cooperation invoices settled in 30 days instead of 60, a right for small business cooperatives to demand negotiations, and a fair dealing law covering online platforms.
The Investor · Invest desk
What happened
- The Korea Federation of SMEs released 32 legislative proposals for the second half of the 22nd National Assembly, tied to 28 laws that sit under six different standing committees.
- It wants payment deadlines under the Mutual Cooperation Act and the Subcontracting Act cut to 30 days from the current 60, which it framed as a cash flow measure for smaller firms.
- It also wants a law on fair dealing by online platforms, arguing that small businesses and small merchants increasingly depend on those platforms for their sales.
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Why it matters
- cost Halving the clocks shifts about a month of billings off supplier balance sheets and onto the buyers and large retailers that currently hold the invoice for 60 days.
- constraint By marking 10 of its 32 proposals as core tasks, the federation has picked the 10 it will put its weight behind in a short session.
- exposure A fair dealing statute would put marketplaces that write their own seller terms inside a set of statutory market rules that small merchants could invoke.
- decision On older workers, the choice between extending the retirement age and rehiring would move to the individual employer, with incentives attached to whichever route it picks.
Halving a payment deadline changes who finances the gap. Under the federation's proposal a buyer would hold a subcontract invoice for 30 days instead of 60 [6], and the supplier would carry half the receivable it carries now [16]. The large retail asks work the same way: 30 days from 60 on direct purchases, 20 from 40 on consignment-style purchases [7]. All four of the requested cuts are exactly half the current term [16].
The bargaining ask has the wider range of outcomes. The federation wants the Small and Medium Enterprise Cooperatives Act and the Fair Trade Act amended this year so that cooperatives hold a right to request negotiations [4]. It described the gap in bargaining power between large and small firms as one factor deepening economic polarization [5]. The federation did not say what happens when a large firm declines the request.
Two of the core tasks pull in opposite directions on rules. The federation wants a fair dealing law written for online platforms, on the grounds that small businesses and small merchants increasingly depend on platforms for sales [9]. It also wants a special act on regulatory exemptions so products based on new technology can reach the market quickly [10]. The federation asked as well for easier raw material thresholds in the system that links supply payments to material costs [8], a support framework for decarbonization [11], and a revision of the Serious Accidents Punishment Act to reflect conditions at small firms [12]. And it wants Noranusan lump-sum payouts excluded from health insurance premium assessment, as applies to other private pensions [14].
The package runs to 32 proposals tied to 28 laws under six standing committees [2], with 10 marked as core [3]. The other 22 sit behind them [17].
"Looking at aggregate indicators such as exports and growth forecasts, the economy may appear to be booming," said Kim Hee-joong, head of the federation's economic policy division, "but K-shaped polarization is gradually deepening, with bank delinquency rates among small businesses rising and corporate bankruptcy filings hitting a record high" [15].
I would expect the deadline cuts to move before the negotiation right. A deadline is a date in a contract and needs no new institution, while the negotiation right requires touching the Fair Trade Act as well as the cooperatives statute [4]. The counter-case is straightforward. The cash in a 30-day cut is immediate and measurable for the buyers who currently hold the paper, and a meeting a large firm can decline costs it a calendar slot, so the cheap item is the one that passes. There is a third path in which the platform law arrives first, since it is the ask with the clearest constituency among small merchants selling through marketplaces [9].
What would show the first reading wrong: deadline amendments enacted with transition periods or size thresholds that keep the largest buyers on 60 days. Or a negotiation right that clears both statutes intact while the payment clocks stay where they are. The federation put no figure on the value of transactions the shorter deadlines would cover [18].
What to watch
- Whether the Small and Medium Enterprise Cooperatives Act and Fair Trade Act amendments are actually tabled this year, as the federation asked for.
- Whether any payment-deadline amendment arrives with size thresholds or transition periods that keep the largest buyers on 60 days.
- Whether the online platform fair dealing law is introduced as a standalone statute or folded into existing fair trade rules.