Good morning, fellow citizens,

A few days ago, I received a phone call from the owner of a small company. After hearing his story, I felt my mind sink. As a parts supplier for a conglomerate, his business experienced difficulty stemming from soaring raw material prices, which rose as much as 50 percent this year. He asked the conglomerate to pay more for parts, but instead it broke off business relations with him. As a result, his business went under last month.

I further reviewed the current situation of small and medium-sized enterprises and heard many surprising stories. Another business owner complained that he made efforts day and night to develop a technology to reduce supply costs, but the large company he did business with cut back on the price they were willing to pay for parts, causing his endeavors to go down the drain.

In addition, some criticized commercial banks for still engaging in unfair business dealings with their borrowers even though they declared that there would be no more such practices. Many people also complained that it is extremely difficult to take out bank loans even though the Government and the Bank of Korea said they would increase liquidity.

Fellow citizens,

Have you ever heard of a term “99-88?” It represents the fact that small and medium-sized enterprises and self-employed individuals are accounting for 99 percent of the total number of businesses and 88 percent of employment in the country.

Business sentiment seems to be worse than actual economic indicators because the SMEs that play such a great role in the nation’s economy are in dire difficulties.

It is true that nobody can deny the fact that the conglomerates have served a leading role in contributing to Korea’s remarkable economic development so far.

The recent tough economic conditions notwithstanding, exports have increased more than 20 percent. This accomplishment should be ascribed to the large conglomerates. I know well that even those large companies are suffering hardships these days. I hope, however, the large conglomerates will have a greater understanding of the difficulties facing small and medium-sized companies and put themselves in their shoes.

Only when the conglomerates and SMEs maintain mutually supportive relations will the country’s economic fundamentals become more solid and the competitive edge of large companies improve. Of course, I have heard of many of such best practices. Some businesses are adopting a so-called “benefit-sharing system.” Under this system, when a small or medium-sized company works with the conglomerates to successfully reduce costs, the benefits will be shared with them both. Some conglomerates are actively providing support for human resource development of their subcontractors.

I firmly believe that the rescue of SMEs is a shortcut to boosting domestic consumption and creating more jobs, which in turn would be of help for large businesses. At this time of difficulty, would it be possible for SMEs to stand on their own feet if conglomerates are engrossed in seeking only their own survival without taking into consideration the distress of their small-sized suppliers? Small businesses and large businesses are coexisting entities that are inextricably interrelated.

For its part, the Government is painstakingly making efforts to work out measures to come to the aid of small businesses. Among other things, the Government is cutting taxes for SMEs and self-employed individuals, and they will be the major beneficiaries of the financial support for technological development.

In addition, the Government is additionally providing liquidity for small businesses suffering from knock-in, knock-out (KIKO) currency option derivatives. SMEs will receive greater benefits from the increased fiscal expenditures, which are currently being prepared by the Government.

When I was Mayor of Seoul City, I received a guest who was running a beauty parlor. She was on the brink of closing down even after making desperate efforts by resorting to a personal loan. When times are bad, it becomes tough for people to visit the beauty parlor even once every two or three months. Thus, she reduced personnel and tightened her belt. Still, it was too difficult to pay the whopping interest on the loan. Worse yet, she could not borrow money from the bank, so she was in a helpless situation.

The money urgently needed by self-employed individuals and small business owners mostly ranges from 5 million won to up to 20 or 30 million won. At that time, a more-than-expected number of small business owners went out of business because they could not obtain the cash they needed, and worse yet, their families suffered disruption. On top of this, such small shops support at least one or two employees. The closure of shops is also a disaster for them.

Under these circumstances, I raised a special fund for about 20,000 self-employed individuals and small business owners to help them surmount the financial distress. In addition, I took measures to help those whose homes were foreclosed to stay in rental houses for some time.

I received letters from some of those who successfully started over again with the help of the financial support. They said that what they had received was not money but hope and courage.

At the moment, even more small and medium-sized businesses and self-employed individuals are undergoing difficulties than there were early in this decade. That is why the Government will strive to increase credit guarantee ceilings for business people and facilitate funding for export-oriented small enterprises.

At the same time, the Government will take great care in making sure that the government assistance programs are carried out as intended at the scene of business. This is my promise.

Fellow Koreans,

Amid a number of difficulties, there was a piece of good news last week. That is that Korea and the United States concluded a currency swap agreement amounting to US$30 billion. Through the arrangement, Korea can procure dollars from Washington with Korean currency whenever it needs them.

The Government will continue to prepare itself for any contingency, but as far as foreign exchange liquidity is concerned, the country does not need to worry for the foreseeable future. Now, the important thing is for us to focus on the real economy with extraordinary care. I will do so personally.

When the global economy becomes worse and worse, the Korean economy cannot be an exception. However, we cannot afford to just keep blaming the international economic situation.

Unfortunately, the advanced economies, including the United States, Europe and Japan, expect zero growth next year. But Korea will strive to achieve 4 percent growth, and the nation’s businesses will have to exert unusual endeavors to attain that. One important thing is that domestic consumption-boosting policies will have to be implemented effectively considering slackening exports.

Because of the international economic situation, countries of the world are competing in supplying enormous amount of liquidity, cutting interest rates, increasing fiscal outlays and reducing taxes.

Fellow citizens,

During my recent overseas trips, I met a number of heads of state and economic experts. Many of them recalled that Korea made a leap forward in the course of overcoming the foreign exchange crisis 10 years ago. They have great confidence in our capabilities and encouraged me by saying that our country will tide over the current difficulties as well.

Let us all have confidence in ourselves and overcome the current hardships. We know we can do it.

As I conclude this speech, I want to remind you to take good care of yourselves as the temperatures are going down and colds are spreading. At the same time, I would like to see all citizens share warm and caring feelings with their neighbors in the coming weeks.

Thank you very much.