The global competitiveness of South Korean small and medium-sized enterprises (SMEs) is continuing to decline despite a steady increase in government support for the sector.

According to the Korea Chamber of Commerce and Industry (KCCI) on Tuesday, the number of SME support programs operated by the central and local governments rose by 15.7 percent to 1,646 in 2023 from 1,422 in 2018. Over the same period, the total budget allocated to these programs surged by 60.2 percent to 35 trillion won ($25.3 billion) from 21.9 trillion won.

Despite this increase in funding, Korea’s SME competitiveness ranking in the World Competitiveness Ranking published by the Swiss International Institute for Management Development (IMD) fell to 61st in 2025 from 41st in 2005, placing it among the lowest-ranked countries. In contrast, China rose to 11th from 44th over the same period.

In a proposal on how to strengthen SME capabilities and promote growth released on the same day, the KCCI stated that, instead of spending large portions of the budget on low-performing companies, the government should “focus support on high-potential SMEs” to help them grow into mid-sized or large enterprises, thereby improving policy efficiency.

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