Corruption bill may hit economy

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Corruption bill may hit economy

The Korean economy will potentially lose 11.18 trillion won ($9.53 billion) in the coming year, should the new anti-corruption bill widely dubbed “Kim Young-ran law” go into effect on Sept. 28 as scheduled, a local think tank has forecast.

The Korea Economic Research Institute said Sunday that the bill will deal “a direct blow” to the country’s restaurants, golf resorts and retail sector. Restaurants are expected to lose 8.51 trillion won in revenue, golf resorts 700 billion won and gift retailers 1.97 trillion won during the initial year.

“Given the analysis has excluded indirect impact from slumping consumption in the aftermath of the enforcement of the bill, the size of the loss could be bigger,” said the report, recommending that the National Assembly take complementary measures including revising various yardsticks to gauge corruption.

The law was named for the former head of the anti-corruption commission who authored the initial draft in 2012. According to the draft, public servants, journalists and teachers will face criminal punishments for having received — or elicited — a bribe worth 1 million won or more than 3 million won over a single year.

Entertainment such as expensive meals, rounds of golf or paid vacations are also covered by the law. If bribes are linked to their jobs, smaller amounts will be punished. Meals worth up to 30,000 won, gifts worth 50,000 won and funeral and wedding gifts worth 100,000 won will be allowed to maintain customary social exchanges.

The Anti-Corruption and Civil Rights Commission announced an enforcement plan for the Improper Solicitation and Graft Act, providing specific guidelines for the controversial law last month.

The institute, run by the Federation of Korean Industries, the business lobbying group representing conglomerates, claims the damages from the act could be reduced if the ceilings imposed on the meals and gifts are raised.

If lawmakers lift the limit on a single meal from 30,000 won to 50,000 won, the size of damages will shrink to 4.7 trillion won, according to the think tank. A rise to 100,000 won will result in 660 billion won in loss.

The impact on the golf industry is inevitable, said the KERI, given a single round per person costs about 300,000 won, one-third of the maximum limit on gifts and entertainment.

With the implementation of the bill three months away, various lobbying groups engaged in agriculture, fisheries, flowers, start-ups, restaurants and conglomerates as well as smaller business operators have been demanding its revision.

“We sympathize with the purpose of the bill but the effect is feared to be more serious, given the low economic growth and consumption,” said a joint statement from 26 business groups last Wednesday.

The federation of Korea’s agriculture and stockbreeding contends that the damage from the anti-corruption bill will “threaten the livelihood of those in the related industry.”

Almost 40 percent of all agricultural and livestock products, over 50 percent of fruits and more than 98 percent of hanwoo, or Korean beef, sold throughout the year are consumed as gifts during the traditional holidays such as Chuseok, according to the federation’s data. The gift packages usually cost at least 50,000 won.

“All gift sets exchanged will be replaced by low-cost import products,” it said.


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