Gov’t pledges stimulation for services sector

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Gov’t pledges stimulation for services sector

The government announced it is earmarking over 70 trillion won ($60.5 billion) to stimulate services in the hope of creating 500,000 new jobs over the next five years.

Minister of Economy and Finance Hong Nam-ki unveiled Wednesday a plan to support the services sector - from K-pop to the gaming industry - as part of an effort to stimulate a sluggish economy and job market.

“In order to overcome difficulties, such as slowing growth and exports […] development in the services sector is desperately needed,” said Hong at the plan’s announcement in the Seoul government complex.

“[The plan] aims to resolve any discrimination against the services sector compared to manufacturing,” explained Hong.

Under the plan, state-run banks, including the Korea Development Bank, will provide 70 trillion won in financial support by 2023 to companies in promising service sectors. Hong argued that support is needed to develop services to the levels of other developed countries.

According to the Finance Ministry, the share of value added from Korea’s service sector from the total in 2017 was 58.3 percent, compared to 69.5 percent in Japan and 79.5 percent in the United States.

It hopes to increase that figure to 64 percent by 2023. Korea’s share of employment from services last year was 70.3 percent, compared to 79.9 percent in the United States in 2017.

The government is focused on helping four service-sector industries: tourism, health care, logistics and the so-called content business.

The plan includes addressing some of the country’s most contentious regulations, such as easing the country’s curfew on minors playing online computer games.

Korea currently restricts people under the age of 16 from playing online games from 12:00 a.m. to 6:00 a.m. to curb gaming addiction.

Hong said the government will gradually ease the restriction and encourage industry self-regulation.

The finance minister added that another restriction - a monthly cap of 500,000 won for in-game purchases by adults - will be abolished.

In the tourism sector, the government will expand immediate tax refunds for foreigners from 1 million won to 2 million won. It will host K-pop festivals in May and October every year. The government plan also includes establishing five Esports stadiums by 2022 and large-scale K-pop halls in Seoul and Incheon.

For the health care industry, regulations will be eased on medical advertisements in areas frequented by tourists. The government will also loosen regulations on medical advertisements in foreign languages for plastic surgery and dermatology.

The government will expand support for logistics investment by small- and medium-sized companies to 10 billion won from the current 6 billion won limit.

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