How will South Korea’s 15 trillion won extra budget aid small businesses?

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South Korea's Extra Budget Aims to Aid Small Businesses Through Direct Support and Job Safeguarding Measures

South Korea is preparing an additional budget of 15 trillion won (approximately RM54.2 billion) primarily to bolster support for small businesses and protect employment. This supplementary funding is designed to address the ongoing economic impact of the resurgent coronavirus pandemic, which has necessitated the continuation of social distancing measures. The allocation will include direct cash handouts to mom-and-pop stores and financial assistance for individuals who have been laid off, aiming to prevent significant economic fallout and ensure business continuity.
Direct Financial Assistance for Small Businesses and Individuals

A substantial portion of the extra budget, exceeding half of the total 15 trillion won, will be channelled into direct cash handouts. These funds are specifically earmarked for mom-and-pop stores, which are considered the backbone of local economies and have been particularly vulnerable to the disruptions caused by the pandemic. Additionally, support will be extended to individuals who have lost their jobs, providing a financial cushion during a period of economic uncertainty and aiding their re-entry into the workforce.
Safeguarding Employment and Mitigating Layoffs

Beyond direct financial aid, the extra budget is intended to safeguard existing jobs. This objective is partly addressed through the allocation of 4.5 trillion won, drawn from the existing budget, towards job-keeping initiatives and childcare subsidies. These measures are designed to encourage businesses to retain their employees despite economic pressures and to support working parents who may be struggling with childcare responsibilities due to ongoing public health restrictions.
Investment in Public Health Infrastructure

A portion of the supplementary funding, amounting to 4.1 trillion won, will be dedicated to enhancing South Korea's public health infrastructure. This includes investments in virus treatment facilities and the procurement of vaccines. Strengthening these areas is crucial for managing the ongoing pandemic effectively and creating a more stable environment for economic recovery, which in turn benefits small businesses by allowing for a gradual return to normal operations.
Financing the Supplementary Budget

To finance this significant extra budget, the Ministry of Finance plans to increase the issuance of treasury bonds by 9.9 trillion won. The remaining funds will be secured through adjustments and reallocations within other existing spending plans. This approach highlights the government's commitment to providing substantial economic relief, even as it acknowledges the potential impact on the national debt-to-GDP ratio, which is projected to reach a record 48.2 per cent in 2021.

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How will South Korea’s 15 trillion won extra budget aid small businesses?

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