South Korea’s startup and SME core digital infrastructure will soon be facing a complete overhaul. Following a fire at the National Information Resources Service, the Ministry of SMEs and Startups (MSS) has ordered a full inspection of all affiliated digital systems. As this national data center fire has unexpectedly highlighted the vulnerability of national IT infrastructure, Korea vows to reassure founders, investors, and the public that resilience and accountability will be prioritized.

National Data Center Fire Prompts Comprehensive IT System Audit

On October 1, Minister Han Seong-sook of the Ministry of SMEs and Startups convened a policy council meeting following the national data center fire incident.

The session, held at the Korea Technology Finance Corporation (KIBO) in Yeouido, brought together leaders from 11 public institutions including the Korea SMEs and Startups Agency (KOSME), and the Small Enterprise and Market Service (SEMAS).

Minister Han announced a full-scale review of IT and facility systems across all affiliated institutions, as a follow-up measure for last week’s fire at the National Information Resources Service. She emphasized that while core MSS systems were restored quickly, long-term measures must be reinforced to prevent disruption to SMEs and small businesses.

National Data Center Fire Puts SME and Startup Operations at Risk

The National Information Resources Service underpins critical government operations, including digital systems used by SMEs for financing and regulatory compliance. Disruption at this scale risks delaying loan disbursements, grant processing, and startup support services.

The timing is also particularly sensitive, as demand for liquidity spikes ahead of the Chuseok holiday. That is why Minister Han specifically called on financing agencies, including KIBO, KOSME, and the Korea Credit Guarantee Fund (KODIT), to ensure that funding flows remain uninterrupted.

This event has broadened the discussion beyond emergency recovery. It raises questions about the resilience of Korea’s digital infrastructure, a crucial foundation for innovation-driven growth.

Accountability Demands: Preventing Future Disruptions

Minister Han Seong-sook issued a strong call for accountability, urging agencies to streamline processes, unify service portals, and adopt AI-based evaluations.

“Every year, 1.1 million SMEs and small merchants apply for MSS programs. One hour lost in our systems equals 1.1 million hours for those applicants. We must save even one second of their time.

Public institutions must focus all efforts to minimize inconvenience to SMEs and merchants caused by this fire. Please pursue field-based policies and user-centered reforms so that government objectives can be carried out without delay. Prepare thoroughly for the upcoming audit.”

In addition, Han highlighted that the government reorganization establishing a vice-minister for small businesses increases the responsibility of MSS and its institutions, requiring a higher standard of preparedness and responsiveness.

A Test for the Digital Backbone of Korea’s Startup Ecosystem

The national data center fire has now escalated further, becoming more than a mere operational disruption for Korea’s startup and SME ecosystem. This is a test of how the government safeguards the most vital digital backbone on which funding, applications, and compliance depend.

The incident also exposes the fragility of centralized systems and underlines the importance of building redundancy, cybersecurity, and risk management capacity. That is why the government’s swift move toward a mandatory audit could become a reassurance for global investors that South Korea views digital resilience as inseparable from industrial and financial stability.

The issue will now move under the scrutiny of the upcoming National Assembly audit. Therefore, Minister Han Seong-sook urged agencies to review past shortcomings, prepare corrective measures, and present clear accountability for system resilience.

After all, the outcome of this will be critical for startups and SMEs, as it will set the tone for how digital infrastructure policy and budget oversight are aligned with Korea’s broader innovation agenda

National Data Center Fire: A Turning Point in Korea’s Digital Policy Credibility

Beyond the unfortunate incident, the fire at the National Information Resources Service has actually become a catalyst for Korea to re-examine its digital risk management. By mandating a full audit, MSS is positioning itself not only to restore operations but also to demonstrate that the government is serious about protecting SMEs and startups from systemic vulnerabilities.

The episode also highlights to founders that digital infrastructure is now as essential as capital, while investors view the audit as a measure of Korea’s resolve to strengthen its systems. How this process unfolds will determine both the credibility of Korea’s digital governance and the confidence it inspires across global markets.

– Stay Ahead in Korea’s Startup Scene –
Get real-time insights, funding updates, and policy shifts shaping Korea’s innovation ecosystem.
➡️ Follow KoreaTechDesk on LinkedIn, X (Twitter), Threads, Bluesky, Telegram, Facebook, and WhatsApp Channel.