10% rebate plan sows 100% confusion

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10% rebate plan sows 100% confusion

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The government’s plan to stimulate the domestic economy through rebates on purchases of energy-efficient home appliances is bringing confusion to consumers and retailers alike, with criticism of abrupt announcements, complicated procedures and a lack of details.

The Ministry of Trade, Industry and Energy announced Thursday that a 10-percent cash refund will be given for purchases of grade 1 energy-efficient products between July 1 and Sept. 30. Eligible products are televisions of under 40 inches, air conditioners, refrigerators, kimchi refrigerators and air purifiers. The refunds are limited to sales made by four mass merchandisers: Hi-mart, ETLand, Samsung Digital Plaza and LG Bestshop.

The initiative is part of the government’s plans for a 20 trillion won ($17 billion) fiscal stimulus package with a 10 trillion won supplementary budget earmark announced a week ago, including tax cuts for owners of old diesel automobiles who agree to scrap the polluting vehicles and buy new ones.

The announcement of the appliance refund policy came suddenly, just one day before its implementation, and employees at the retailers had to extend their working hours to meet the ministry’s demand for immediate preparations.

If retailers were unprepared, so were potential buyers. After doubts were aired about the limited scope of retailers that the policy included ­­­- no online shopping malls, TV home shopping, for example ­­­- the government revised the plan the next day to encompass all home appliance retailers, both online and offline.

Bureaucrats hastily set up a meeting with representatives of online malls.

Customers and retailers are also skeptical about the complicated refund process. To get cash back, buyers must submit requests to the Korea Energy Agency by uploading detailed transaction information online or asking the retailer to do it for them. The website for this process will be live starting July 29.

Baek Song-yi, 38, said, “A 10-percent refund is nice, but I have to give online personal identification before answering six more questions about the transaction. I guess I’ll have the shop take care of it.”

A wholesale company employee said that on top of categorizing refund receipts, the seller has to figure out how to do the personal identification for every customer. “We’ve asked the government for help, but they told us nothing is certain until July 29 when the website opens. They also told us to write down a transaction list by hand for the time being.”

The decision to apply the television refunds only to ones with screens up to 40 inches is also seen as more than a bit unrealistic. The ministry said that televisions are less power efficient than other home appliances, and sales of products under 40 inches accounted for 65 percent of all TV sales in 2015. So the limit, Seoul said, was necessary to save energy.

According to industry sources, however, smaller screen TVs made up only about 20 percent of the market for the past six months.

“I don’t understand why they put this limit on TVs only,” the industry official said, “The bigger a product, the more power it requires. What about the air conditioners and refrigerators?”

The ministry has not given clear information on the policy’s finances as well. It earlier said that the refund might be ended early if the available funds are exhausted, but in a telephone interview with the JoongAng Ilbo Sunday, a ministry official said, “There could be more funding; we still have to decide the exact amount.”

A press release on Monday tried to address the growing criticism that the policy is incomplete and hastily conceived. The ministry said humbly that it would continue to communicate with retailers to gather suggestions, increase understanding of the industry, and open call centers to respond more actively to consumers’ concerns. It also said that a concrete funding plan is currently being devised based on expected sales and seasonal effects on demand.

Other retailers that joined the refund event after the revision started promoting it Sunday. Hyundai Department Store said that 15 stores across the nation would have an eco-friendly home appliance festival to participate in the government’s initiative.

The 10 percent refund is available at other discount supermarkets, online malls and home shopping channels as well.


BY LEE SO-AH, KWAK JAE-MIN [lee.dongeun@joongang.co.kr]

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