Samsung Electronics to launch 500 billion won fund to help small suppliers

Samsung Electronics Co Ltd will launch a 500 billion won ($445 million) fund to help small suppliers. The move from the highest-profile South Korean firm follows calls by new president Moon Jae-in to protect small businesses.

Moon who came to power this month has promised to rein in the family-owned conglomerates that dominate the country's economy. Moon, who calls himself 'jobs president', added that he wanted to discourage contract jobs, increase the minimum wage and cut working hours.

The company said the fund will allow its suppliers to borrow cash interest-free for a year to allow suppliers' subcontractors to be paid promptly. The fund will run until 20 May.

Samsung said in a statement that it decided to establish the fund after meetings with suppliers late last year.

In another initiative on the lines, the nation's largest agricultural cooperative said it will consider making 5,245 temporary workers regular employees.

The National Agricultural Cooperative Federation has a workforce of 35,000 full-time and part-time workers at dozens of affiliate companies, including a bank and a hypermarket chain.

Also, SK Broadband Co Ltd, an affiliate of South Korea's largest telecom firm SK Telecom, plans to set up a service subsidiary that will make 5,200 workers, currently on contract, regular employees, Yonhap news agency said on Tuesday citing the company.

The new initiative will put an end to payments in promissory notes that had often led to slow circulation of funds for second-tier suppliers.

Samsung Electronics plans to manage the fund for three years until May 2020 to ensure settlement of payments in cash in 30 days. Samsung has plans to consider extending the fund operation upon request from suppliers.

According to an unnamed official from Samsung Electronics, cash payment was not mandatory, but the company will do its best to encourage its suppliers to take part in the new initiative to the extent they can, Pulse reported.