SMEs ministry raises public procurement threshold for small firms

The SMEs ministry said Tuesday it secured State Council approval for a revised law that raises the contract value threshold for preferential public procurement by small and medium-sized enterprises.

Under the new rules, the maximum contract amount eligible for preferential treatment under the Local Contracts Act will increase from 230 million won to 350 million won. Previously, local entities operated under lower national standards that limited opportunities for smaller contractors.

The discrepancy arose because local governments and public corporations, while governed by the Local Contracts Act, were forced to apply the monetary thresholds of the National Contracts Act for preferential bidding. Since the national act's thresholds were lower than those of the local act, the scope for small business participation was unnecessarily narrowed.

To resolve this, the ministry revised the Act on Promotion of Purchase of Small and Medium Enterprise Products and Support for Their Market Expansion to allow threshold amounts to vary based on the specific contract law governing each institution. The changes are scheduled to take effect in December following necessary preparatory procedures.

"Public procurement serves as a solid stepping stone for small businesses to build initial sales and delivery track records," Shim Jae-yoon, the ministry's director-general for global growth policy, said. "We will continue to refine the system so that more small companies can secure a foothold for growth in the procurement market through this revision."