On April 9, 2026, a significant step was taken in South Korea’s manufacturing and distribution landscape, as the government, major corporations, and industry representatives came together to sign a landmark cooperation agreement aimed at supporting small and medium-sized enterprises (SMEs) in the plastic processing sector. The move comes in response to the recent surge in crude oil prices, a consequence of ongoing conflict in the Middle East, which has sent ripples through global supply chains and hit raw material costs particularly hard.
The agreement ceremony, held at the main building of the National Assembly and hosted by the Democratic Party’s Euljiro Committee, brought together a diverse group of stakeholders. Among those present were representatives from nine major demand-side companies, including household names like CJ CheilJedang, Daesang, Nongshim, Lotte Chilsung Beverage, LG Household & Health Care, GS Retail, Sangmidang Holdings, Starbucks Korea, and the Nonghyup Economic Holding’s Agricultural Materials Headquarters. Government officials, including Lee Byung-kwon, Vice Minister of the Ministry of SMEs and Startups, and Fair Trade Commission Chairman Joo Byung-gi, also attended, underlining the event’s national significance.
According to E2news, the Ministry of SMEs and Startups explained that the agreement was prompted by the acute cost pressures facing plastic processing SMEs. The sharp rise in crude oil prices—primarily due to instability in the Middle East—has driven up the cost of naphtha, a key raw material for plastics and packaging. Yet, many SMEs have struggled to pass these increased costs on to their larger corporate clients, resulting in mounting financial strain. The government’s new initiative seeks to address this imbalance head-on.
Under the terms of the agreement, demand-side companies committed to a series of measures designed to ease the burden on their SME suppliers. These include adjusting delivery prices to reflect increased raw material costs, making early payments, extending delivery deadlines in the event of supply disruptions, and exempting late penalties when such disruptions occur. The government, for its part, pledged to support these efforts by offering incentives—such as preferential treatment in the win-win growth index, awards, and reduced burdens in regular consignment surveys—for companies that actively participate in the agreement.
Vice Minister Lee Byung-kwon emphasized the broader implications of the agreement, stating, “This agreement will help alleviate the cost burden concentrated on SMEs and enable large and small companies to overcome the crisis together.” He also highlighted the government’s intention to work with the National Assembly, related ministries, and industry stakeholders to expand the agreement’s reach and effectiveness. “We will continue to discover and strengthen incentives to encourage company participation and spread the agreement industry-wide,” Lee added, according to Yonhap Infomax.
The food sector, with its heavy reliance on plastic packaging, was singled out as a particular focus for the agreement. As reported by Yonhap, the government and industry leaders believe that targeting this sector will maximize the agreement’s ripple effect throughout the supply chain, helping to stabilize not just the plastics industry but also the broader network of manufacturers and retailers that depend on affordable, reliable packaging materials.
Beyond plastics, the April 9 event also saw a parallel agreement in the petroleum refining industry. Refining giants such as S-Oil and GS Caltex agreed to overhaul longstanding trading practices with gas stations, moving away from exclusive contracts and post-settlement pricing. Instead, refiners will now adopt a mixed sales model—requiring dealerships to purchase at least 60% of their products from contracted brands—and will publish daily prices in advance, eliminating the uncertainty of post-settlement calculations. The Fair Trade Commission announced plans to incorporate these changes into the standard dealership contract for petroleum distribution, a move aimed at correcting unfair trade practices and increasing transparency in the sector.
Fair Trade Commission Chairman Joo Byung-gi expressed optimism that these agreements would foster a culture of “win-win cooperation” across industries. “We expect this agreement to spread a culture of win-win cooperation throughout the industry,” Joo stated during the ceremony. He also announced that companies actively participating in delivery price cooperation would receive additional points in fair trade evaluations, providing further motivation for large firms to support their smaller partners.
The government’s multifaceted approach includes not only incentives and policy support but also enhanced monitoring and on-the-ground assistance. As outlined by the Ministry of SMEs and Startups, efforts will be made to ensure that the delivery price adjustment system is implemented effectively at the field level. This includes ongoing checks, direct support for SMEs facing difficulties, and continued promotion of fair trading practices. The government is also committed to working with the National Assembly and relevant ministries to detail and expand the agreement, ensuring that its benefits reach all corners of the supply chain.
The agreements come at a time when the resilience of supply chains is being tested globally. The Middle East conflict’s impact on crude oil prices has underscored the vulnerability of industries dependent on imported raw materials. In South Korea, where SMEs play a vital role in manufacturing and exports, government intervention has become crucial to maintaining competitiveness and stability. By bringing together major corporations, SMEs, and policymakers, the April 9 agreements represent a concerted effort to share the burden more equitably and ensure that no one segment of the industry is left to shoulder the costs alone.
For SMEs in the plastics sector, the new measures offer some much-needed relief. The ability to negotiate delivery prices that reflect real-time changes in raw material costs, combined with early payments and more flexible delivery terms, could help stabilize cash flows and prevent bankruptcies. For large corporations, the incentives tied to compliance with the agreement provide a tangible reason to support their suppliers, beyond the long-term benefits of a healthier, more resilient supply chain.
Of course, the real test will be in the implementation. The government has promised to strengthen monitoring and field support to ensure that the spirit of the agreement is realized in practice, not just on paper. With the combined weight of industry leaders and policymakers behind it, there is cautious optimism that this new model of cooperation could serve as a blueprint for other sectors facing similar challenges.
As the dust settles from the signing ceremony, all eyes will be on how quickly and effectively these agreements translate into real-world improvements for South Korea’s SMEs. With the stakes so high—both for individual businesses and the broader economy—the success of this initiative could mark a turning point in how the country navigates global supply chain shocks and supports its vital small business sector.