Reasons for Proposal
The type of business suitable for livelihood is intended to discourage large enterprises from entering the area where micro enterprises do business. When the organization of micro enterprises files an application for designation as a type of business suitable for livelihood, the type of business suitable for livelihood is designated by recommendation by the National Commission for Corporate Partnership and decision by the Committee for Deliberation on Types of Business Suitable for Livelihood under the Ministry of SMEs and Startups.
However, a recommendation by the National Commission for Corporate Partnership and deliberation and designation by the Ministry of SMEs and Startups take 15 months, during which it is not possible to prevent large enterprises from acquiring, initiating, or expanding their business in the applicable area. As such, some suggest it cannot prevent harm to micro enterprises.
Furthermore, while it is recommended that any large enterprise or similar enterprise engaging in a certain type of business or item at the time when it is designated as the type of business suitable for livelihood should restrict its scope of business, including items, volume, facilities, services, and promotional activities, within a specified period not exceeding three years, there is no punishment if they do not follow such recommendations, which makes the recommendations practically ineffective.
In this regard, this Act aims to promote the rights and interests of micro enterprises by limiting the participation of any large enterprise or similar enterprise in the area for which the designation procedure is going on as an application is filed for designation as the type of business suitable for livelihood with an allowance for ordering compliance or business suspension if any large enterprise or similar enterprise engaging in a certain type of business or item at the time when it is designated as the type of business suitable for livelihood does not follow the recommendations that limit the scope of their operation (Article 8 paragraph 1, Article 11 paragraphs 3 and 4, and Article 15 paragraph 2).
Major Provisions
Articles 8 and 11
