Korea Credit Guarantee Fund (Kodit) held its 40th anniversary celebration in a ceremony at Hotel Lotte in downtown Seoul on May 12. A slew of dignitaries attended, including Chung Eun-bo, vice chairman of the Financial Services Commission (FSC), and Vice Chairman of the Korea Federation of SMEs (Kbiz).
Chairman Suh Geun-woo, in his congratulatory speech, said Kodit has to diversify its products to cope with the uncertainty of the global economy and expand support to the SMEs with great potential for growth.
Suh’s speech came at an International Forum to commemorate Kodit’s 40th anniversary in which he said SMEs are vulnerable to the changes in the global economy, which in itself is heavily influenced by the sluggish economies of many large countries.
Kodit is out to support SMEs in the age of low growth by developing new guarantee products to expand its support to the SMEs with great potential for growth, the Kodit CEO said.
Kodit has played the role of being a stepping stone for SMEs, but it will be reborn as a prop for those SMEs in the next hundred years so that it will be a huge support for the Creative Economy Drive pushed by the government through its ever-changing management policies.
Giuseppe Cragmina, an expert on SMEs with the U.S. Small Business Administration, talked about the attributable impact of credit guarantees, adding that SMEs with credit guarantees created 25 percent more jobs than those that did not get credit guarantees.
Simon Bell, the Global Lead for SME Finance in the Finance and Markets Global Practice of the World Bank, gave the keynote speech at the forum. In it, he said that the credit guarantee system in Korea has fewer side effects than other policy options in the in the financial market, and thus is more effective in supporting SMEs. Kodit has been doing a great job in the key areas of the national economy such as the creation of jobs, and coping with changes in the economy than its counterparts in other countries, the World Bank official said, quoting from the World Credit Guarantee System Report put together by the World Bank. The report further said Kodit is the most successful model for credit guarantee system around the world.
In his presentation at the forum, President Bernhard Sagmeister of the Austria World Service said the evaluation of the credit guarantee system in Austria is not always based on the development of defaults, but also centered on its economic impact.
Small and medium-sized enterprises (SMEs) serve as the root of the national economy. However, SMEs suffer from limited access to financing due to the high administrative costs of small-scale lending, asymmetric information, high risks attributed to SMEs and deficiency in collateral. In order to alleviate this problem, Korea Credit Guarantee Fund (KODIT) was founded in June 1976 by the Korea Credit Guarantee Fund Act. Its objective is to lead the balanced development of the economy by extending credit guarantees for SMEs that have future prospects but lack tangible collateral and by stimulating sound credit transactions through the efficient management of credit information.
KODIT is a public financial institution providing comprehensive support for SMEs. With its capital fund of $3.2 billion, KODIT provides 11 types of general credit guarantees and P-CBO guarantee. As of the end of 2005, the outstanding credit guarantee reached over $31.6 billion. In addition, KODIT operates credit information management, guarantee-combined investment, credit insurance, management consulting and infrastructure credit guarantee services. Throughout its history, KODIT has actively supported the SMEs of Korea, thereby promoting economic vitality, easing the inequalities within the economy and instilling the importance of credit. In particular, KODIT played a crucial role in reviving the economy by implementing government policies at every financial crisis and stabilizing the market.
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