Ahn Taek Soo, CEO of Korean Credit Guarantee Fund and a former lawmaker has revealed his three year management story
The Global Financial Crisis first took shape in 2007 following the American Subprime Mortgage Crisis and reached its peak a year later with the collapse of Lehman Brothers.
Korea, as one of the component, of the global economy, was not free from the crisis. SMEs lacking capital felt like they were back in the 1998 Asian Crisis. It was then when Korean Credit Guarantee Fund (KODIT) showed its role as a driving force for SMEs to recover from the crisis, introducing various emergency measures.
KODIT credit guaranteed the largest amount for a single year in 2009 since the establishment of the institution, 46.9 billion won, taking up 41.7% of all credit guarantees in 2009. In particular, newly guaranteed credit increased 90% to 17.7 billion won from the previous year. CEO Ahn said, “We were the single largest and most depended credit guarantee institution during the crisis. There is no doubt that KODIT played a crucial role in our economy recovering from the global recession.”
Domestic Achievements
The accomplishments of the 3 years of CEO Ahn’s term in office can be divided into four parts.
First is the transformation of the screening process. What was previously “a past centered achievement” has become a “future potential centered” process. In July 2009, he introduced the examination chart to assess the “‘future potential and management capability” of SMEs. Furthermore, with 30 years KODIT experience and know-how, he developed an “enterprise value evaluation system” to systematically discover promising SMEs.
Second is strengthened communication. With his belief that “the right policy can only be seen when present on the frontline,” he emphasized the need to strengthen communication between local branches and firms. He personally visited local branches more than 3 times during his term to really learn the difficulties SMEs were facing. It is in KODIT’s daily routine for branch managers to visit at least one firm a day now.
Third is the establishment of the online loan market. Recent increases in the interest rate were deteriorating the competitiveness of SMEs. To tackle the high interest rates SMEs were facing, he introduced an online loan market in which SMEs and banks can exchange information online, allowing SMEs to choose the most suitable loan deal. This led to s 0.53% decrease in the interest rate, falling to 5.69% from 6.22%.
The latest product is the introduction of Two-in-One insurance. This is a new kind of insurance that has both the functions of collateral for a loan and coverage of unexpected losses due to insolvency or default. This had helped SMEs escape losses in account receivable through the bond insurance. In addition, financial support became far easier through credit guarantee, thus killing two birds with one stone.
To Become a Global Standard
The recent success of KODIT’s export of credit guarantee policy is just as big as domestic accomplishments.
KODIT began to initiate its “know-how” of credit guarantee to Kazakhstan, Vietnam, and Cambodia, etc., as a part of the “Knowledge Sharing Program” in 2007. Asian developing states had already recognized that KODIT was one of the driving forces behind Korea’s miraculous growth and showed their interest in the credit guarantee policy. With successes in Vietnam and Cambodia, KODIT signed an MOU regarding the initiation of credit guarantee with other countries.
CEO Ahn is still not fully satisfied with his accomplishments overseas, “We realize that the export of credit guarantee is not only enhancing Korea’s dignity on the world stage but that there are also practical interests. We plan to actively move forward to become the global standard,” he stated, revealing his strong passion for exporting credit guarantee.
Prospects for This Year
With the global economy going through slowflation once again, SMEs are still walking on a “knife-edge.” Henceforth, KODIT plans to enhance its support to SMEs by setting the total amount of credit guarantee to 46.1 billion. “We plan to assist stable growth by warm support,” said the CEO.
Under the ‘Selection and Focus’ theme, KODIT has enlarged its budget to 19 billion won in main government policy areas, and will play a leading role in solving issues, in particular, the youth unemployment problem. On the other hand, some firms lacking competitiveness will have to go through “limited firm classification model” and “structural adjustment program” in order for KODIT to manage its scarce resources more efficiently.
Lastly, KODIT plans to develop services in more depth by introducing an SME clinic system that will provide expert consultation if needed. A new loan extension service will be introduced in which customers do not need to visit branches for renewal. “We will not stop developing our customer friendly policies until every customer is fully satisfied,” said the CEO.
“Our goal is to create a more convenient and freer environment for enterprises under the slogan “Happy world for enterprises, KODIT to go along as Value Creator.” “Under this vision, KODIT is not just a simple supplier but a creator of customer value,” he added. He plans to discover and promote more than 2,000 promising small enterprises, as well as enhance assistance for consistent growth.
KODIT is under the process of developing more than 20 new products in order to give tailored support. In the short-run, KODIT is planning to enlarge support drastically in government policy areas such as new growth engines and financially-alienated sectors so that SMEs can secure self-sustainable growth. In the long-run, it will expand its enterprise territories and support credit guarantee from various angles.
He concluded the interview by revealing his finish line, “We are running towards the secured autonomy of the institution and the creation of an environment in which SMEs can realize self-sustainable growth.”