SEOUL, Oct. 7 (Korea Bizwire) — South Korea’s public institutions have been mandated to buy 8 percent of their annual procurements from startups.
The Ministry of SMEs and Startups announced that the revised enforcement ordinance of the SME Establishment Support Act was resolved at a cabinet meeting and would take effect from Thursday.
Under the revision, the nation’s 837 public institutions are mandated to purchase 8 percent of their annual procurements from startups.
“The mandated procurement rate of 8 percent was set through consultations among related government agencies, on the basis of the considerations that the startups aged less than seven years accounted for 8.6 percent of public institutions’ annual procurement during the 2015 to 2019 period.” a ministry official said.
The ministry plans to adjust the ratio after running the mandated procurement system for two or three years.
The 8 percent of the public institutions’ procurement for last year is estimated to amount to about 11 trillion won (US$9.44 billion) in spending.
Given that procurement among public institutions continues to grow year after year and 8 percent is a minimum standard, the ministry expects the revised rule to contribute to expanding the public procurement market for start-ups.
M. H. Lee (email@example.com)