SMEs facing cash shortage ahead of Lunar New Year

With 10 days to go before Lunar New Year's Day, which falls on Jan. 24, small-and medium-sized enterprises (SMEs) are suffering from a serious funding shortage.

According to a survey of 290 SMEs by the Central Committee of Small and Medium Business Cooperatives Sunday, 59.0% of respondents they're funding situation is ¡°serious,¡± much higher than last year¡¯s 33.3%.

Only 8.5% said that things were ¡°going smoothly,¡± much lower than last year¡¯s 31.6%.

Major reasons for cash crunch were sluggish sales (42.9%), delayed withdrawals of money for sales (23.7%), hikes in manufacturing costs (10.8%), and bankruptcies of transaction companies (7.4%). The amount needed to pay bonuses and settle credit purchases around Lunar New Year's Day came to 152 million won per company on average. Of the total, they had secured about 104 million won, resulting in a shortage of 48 million won.

Meanwhile, the Fair Trade Commission (FTC) decided to launch a crackdown on businesses that failed to pay due money to their small- and medium-sized subcontractors.

From Jan. 15 to Jan. 31, the FTC will establish and operate reporting centers at its subcontracting bureau (02-503-8894-5), in Pusan (051-466-3193-4), Kwangju (062-225-8464-5), Taejon (042-531-8576-7) and Taegu (053-742-9144-5).

The Bank of Korea, meanwhile, plans to flexibly control the money supply this month based on its forecast that total demand for the Lunar New Year's Day would reach 3 to 3.5 trillion won, similar to the level in past years.