New duty-free shops to open early

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New duty-free shops to open early

Finance Minister and Deputy Prime Minister for the Economy Choi Kyung-hwan said the government will allow four new duty-free stores to open by the end of this year, pushing the original plan forward by a few months.

A joint venture of Hotel Shilla and Hyundai Development, Hanwha Galleria and smaller operators SM Duty Free and Jeju Toursim Organization will have to expedite their plans.

This decision is part of the government’s attempt to revitalize the sagging tourism industry after the outbreak of Middle East respiratory syndrome (MERS).

“Amid many global economic uncertainties, we should take more aggressive measures to revive sagging industries and execute the 22 trillion won [$19.1 billion] stimulus package as soon as possible in order for Korean economy to get back to its normal growth momentum,” Choi said during opening remarks at a meeting of economy-related ministries held on Wednesday at the Seoul Government Complex.

“In particular, the government hopes to strengthen policies so that both conglomerates and SMEs can benefit and pursue mutual growth in the duty-free industry.”

The meeting Wednesday also confirmed that the government will start requiring major duty-free shops nationwide to allot at least 20 percent of their total space to selling products from small and midsize manufacturers, from the current 15.9 percent. This rule will be applied to all duty-free stores.

The government will open two more locations of a retail chain called IMShopping, which sells products from SMEs, by the end of this year.

The government also expanded benefits to small duty-free operators.

Considering the popularity of online duty-free stores - in which travelers can purchase products online first and pick them up later when leaving Korea - the government will offer technical assistance to small duty-free companies to build their own online shops and make digital product catalogues in foreign languages.

So far, only two of the eight small downtown duty-free stores offer digital catalogues in Chinese.

Choi said the Finance Ministry will expand financial aid from state-run Tourism Promotion Fund to small duty-free stores like SM Duty Free to 10 billion won by 2018 from 3 billion won planned for next year. This year, the fund has allocated 1 billion won to help small duty-free stores extend facilities in Incheon International Airport.

Of the 43 duty-free stores nationwide, 19 are operated by small companies, eight of them in cities, another eight at airports, two in selected areas by Korea Customs Service and one location for foreign diplomats in Korea.

Sales at small duty-free stores are still low compared to those run by conglomerates, worth about 6 percent of Korea’s total duty-free sales as of May, but their sales rose from 3.7 percent in 2013 to 4.8 percent last year.

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