Kodit's Toughest Challenge

New Pres. Ahn calls on officers and staff to do their best to weather the difficulties ahead

President Ahn Taek-soo of the Korea Credit Guarantee Fund (Kodit) during his inaugural address on July 21 called on all officers and staff to work together to make Kodit a top firm for providing support to SMEs in the country.
Expressing concern for the current state of the economy brought on largely by oil price hikes, he said it is time again for Kodit to extend support to SMEs in this difficult time as it did during the financial crisis of 1998.
The Kodit CEO said the accumulation of credit guarantees provided should be increased to 29 trillion won from 28 trillion won for this year, along with an increase in the credit guarantee to be issued for this year to 7 trillion won from the initial 5 trillion won designated early in the year.
He also said he will push for the creation of a special guarantee facility for start-ups launched by young businessmen in order to support the creation of jobs around the country.
Ahn said he will work with the relevant government agencies to revise the regulations in order to give SMEs direct access to the financial market to raise funds. He said the move is meant to enhance the growth of the national economy by revitalizing the business activities of SMEs.
The new president said he is all for the creation of KDF as the expertise of Kodit in the areas of credit information collection, analyses and its excellent manpower accumulated over three decades should be used as a huge financial asset for the country through KDF. He said he would hold consultations with related government ministries, as the matter should be discussed by the parliament.
With regard to the vision for Kodit's future, the new CEO said the company should be able to provide its financial services based on the stages of growth of its clients and their financial needs. Ahn also pointed out the need for the development of guarantee facilities for SMEs tailored to their needs so that Kodit will be able to expand the number of its SME clients.
Ahn also said Kodit has to refine its services, including consultancy, to further develop its know-how.
Ahn reminded the officers and staff of Kodit of the fact that many emerging countries around the world, especially those in Asia, have been benchmarking the success of Kodit's credit guarantee system. This attests to the fact that Kodit's operation has been a great success to the extent that it has become a textbook case from which those countries can learn.
By taking advantage of Kodit's credit guarantee, many start-ups were born, providing jobs to many people across the country. New companies are now better able to grow strong so that they can weather any adverse conditions in the national economy as they did with the financial crisis of 1998.
Now, the economy is again faced with difficulties brought on by the high prices of oil and key raw materials and a financial market that is insecure at best.
The government lowered its economic growth projection for this year from 6 percent to 4 percent with stability becoming a prime factor in its management policies for the second half.
To make the financial market even cloudier, the government changed its inflation projection from 3 percent to 4 percent. The current account deficit is projected to be around $10 billion, one of the largest in recent years.
In the second half, liquidity in the financial markets will be under tighter control, as the financial institutions are required to strengthen their risk management. SMEs, therefore, will have a harder time in securing funds.
Ahn also pointed out that Kodit will be put into a stressful position as the government tries to reform the credit guarantee system, which will bring changes to the company's function.
The government announced in June that it will set up the Korea Development Fund and will announce measures to merge a number of credit guarantee-related organizations in the country including Kodit.
The situation will be a tough test for Kodit and a big challenge for its officers and staff, perhaps the toughest one in the company's 32-year history. nw

President Ahn Taek-soo of Korea Credit Guarantee Fund.