Last Saturday, on December 1st, the Korean Co-operatives Fundamental Law took effect with the goal of boosting performance of small businesses, self-employed, and co-ops in Korea. This new legislation was passed almost a year ago on December 29 to promote sustainable local businesses and achieve the vision of “Seoul, the City of Co-operative”.
Some government related benefits that the newly recognized co-operatives will receive are eligibility to acquire orders from state-owned enterprises, receive small enterprise incentives, and an exemption from fair trade law. Furthermore, this legislation relaxes the financial activity rules for co-operatives as it permits the co-ops to provide some microfinance and credit services.
Previously the legislation for co-ops in South Korea was highly fragmented as each sector, such as agriculture and consumer, was regulated by a different ministry. This new law on co-operatives takes into account the vulnerability of the current economy and promotes community associations. Around 4,000 to 8,000 local enterprises can now receive the status and benefits of being a co-operative due to the presence of this new legislation.
Many existing and new businesses are expected to take advantage of this legislation. Among them is the SK Happy Nanum Foundation, which employs underprivileged members of society to provide free lunches to those with low incomes. According to the Korean JoongAng Daily, SK Happy Nanum Foundation will change its Happy Lunch Box Center to a social co-op, where at least 40% of their services must be for the public good.
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