New duty-free shops being reserved for SMEs

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New duty-free shops being reserved for SMEs

Korea’s conglomerates will be barred from opening new duty-free shops as part of an ongoing effort to help smaller-sized companies, the customs office said yesterday.

The Korea Customs Service announced the plan at a weekly policy makers meeting.

It calls for small- and medium-sized enterprises and provincial public companies to be favored in any future bids to open duty-free shops.

At present, of the 28 duty-free shops located in cities, 16 are operated by the country’s large family-owned business groups.

In terms of market share, the shopping outlets operated by big companies accounted for 85 percent of all sales.

The updated guidelines will be reflected when the KCS issues permits to open 10 new shops in rural cities, although this policy will not cover outlets at international airports.

In addition to restrictions placed on conglomerates, new duty-free shops must increase the proportion of South Korean goods they sell.

Under existing rules, 20 percent or 330 square meters of floor space at a duty-free shop must be set aside to sell local products, but in the future, the percentage will be adjusted to 40 percent or 825 square meters.

For existing shops, the customer service will offer a grace period so they can steadily increase the size of floor space dedicated to selling Korean-made products.

The government, meanwhile, said that conglomerates will not be given contracts to operate cafeterias inside public corporations and agencies. Instead, contracts will be awarded to SMEs.

There are currently 181 cafeterias inside 86 public corporations and government offices, with 41 percent being run by big companies such as Samsung, LG and Shinsegae. Yonhap

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