Lotte Department Store shuts a Busan branch after broken promise

Lotte Department Store's Gwangbok branch in Jung District, Busan, is closed on Wednesday. [SONG BONG-GEUN]

Lotte Department Store's Gwangbok branch in Busan is being forced to shut its door indefinitely starting June 1, and approximately 3,000 workers are at risk of losing their jobs.

The Busan city government has refused to extend the company's permission to operate due to a broken promise going back more than a decade.

Lotte Department Store's Gwangbok branch, which first opened its doors in December 2009, had been operating under temporary permits from the city government every year, but the government rejected this year's extension.

"Around 100 employees that belong to Lotte will get paid leave, but we must have further discussions on the workers that belong to each store that runs business in the Gwangbok branch," said a spokesperson for Lotte Shopping.

Lotte Department Stores are run by Lotte Shopping.

Around 800 stores operate businesses at Lotte Department Store's Gwangbok branch, with the number of employees totaling 3,000.

The relationship between the Lotte Department Store and the Busan city government goes back to 1995. The Gwangbok branch is located on a 195,690-square-meter site in Jungang-dong, Jung District, Busan, where the old city government complex building was located. Busan city government sold the site to Lotte Department Store as the department store promised to build a 107-story Lotte Tower that includes residential units.

The company finished construction of Lotte Department Store in December 2009 but not the Lotte Tower. Busan city government did not give the department store formal permission to start the business, but required it to get temporary permission every year.

The permission ends on March 31 every year, and since the city government rejected the extension, the store had no choice but to close.

Lotte Shopping did start the construction of the Lotte Tower in 2009, the year the Gwangbok department store was opened, but the construction has been halted.

Lotte Shopping said it will hurry the construction of Lotte Tower, though it is blaming the city government for the situation.

"If we make the over 100-story building as hotels or tourism facilities, the profitability sharply drops as the demand in Busan is not enough," Lotte Shopping spokesperson said. "So we suggested an alternative plan to the city government and actually reached an agreement, but it came to naught every time the city gets a new mayor."

"We will accelerate the construction with the goal of finishing it by 2026."

BY CHOI HYUN-JU, SARAH CHEA [chea.sarah@joongang.co.kr]