By Park Jae-hyuk
Large companies have benefited from the anti-graft law, while small firms have suffered because of it.
The so-called Kim Young-ran Act, named after the former Supreme Court justice who first drafted it, came into effect a year ago today. It bars civil servants, journalists and teachers, as well as their spouses, from accepting gifts and meals worth more than 50,000 won ($44) and 30,000 won, respectively.
According to CEO Score, big firms have sharply reduced their entertainment expenses after the law's implementation.
The local consultancy surveyed 139 companies that disclosed their entertainment expenses.
The 139 among the nation's 500 largest companies in terms of sales spent a combined 97 billion won on entertaining their clients in the first half, down 15.1 percent from a year earlier.
Total sales of the 139 companies rose 6.3 percent during the same period.
Yuhan Corp., the nation's top-tier pharmaceutical firm, cut 81.4 percent of its entertainment expenses. NCSOFT and Daewoong Pharmaceuticals also reduced more than 70 percent of their entertainment spending.
In particular, pharmaceutical companies halved their entertainment expenses. Observers attribute the sharp decline to their bribery scandals involving doctors. Shipbuilding, machinery and facility sectors cut 38.4 percent of their spending, followed by the service sector with 29.9 percent and the retail sector with 25.1 percent.
Among the top 10 conglomerates, Kia Motors, Hyundai Heavy Industries and Hyundai Mobis unveiled their entertainment expenses, but Samsung Electronics, Hyundai Motor, Korea Electric Power Corp., POSCO, SK Innovation and Samsung Life Insurance did not disclose their spending.
While the anti-graft law has seemingly had a positive influence on large companies, small- and medium-sized enterprises (SMEs) in Korea have experienced a decline in sales.
According to a recent K-Biz survey, 170 among 300 SMEs answered their sales have declined owing to the law's implementation.
The companies said their sales dropped 34.6 percent on average. Six out of 10 SMEs answered the anti-graft law damaged their management.
They also demanded the government raise the price limits for gifts and meals to over 80,000 won and 50,000 won, respectively. This is because the price limits have barred many small companies specializing in flowers and agricultural products from selling their products as gifts.
"Although I acknowledge the anti-graft law's positive effects on our society, it is expected to damage small businesses, resulting in side-effects such as higher unemployment," Rep. Son Kum-ju said. "The government should take measures to support small firms and boost domestic demand."
Large companies have benefited from the anti-graft law, while small firms have suffered because of it.
The so-called Kim Young-ran Act, named after the former Supreme Court justice who first drafted it, came into effect a year ago today. It bars civil servants, journalists and teachers, as well as their spouses, from accepting gifts and meals worth more than 50,000 won ($44) and 30,000 won, respectively.
According to CEO Score, big firms have sharply reduced their entertainment expenses after the law's implementation.
The local consultancy surveyed 139 companies that disclosed their entertainment expenses.
The 139 among the nation's 500 largest companies in terms of sales spent a combined 97 billion won on entertaining their clients in the first half, down 15.1 percent from a year earlier.
Total sales of the 139 companies rose 6.3 percent during the same period.
Yuhan Corp., the nation's top-tier pharmaceutical firm, cut 81.4 percent of its entertainment expenses. NCSOFT and Daewoong Pharmaceuticals also reduced more than 70 percent of their entertainment spending.
In particular, pharmaceutical companies halved their entertainment expenses. Observers attribute the sharp decline to their bribery scandals involving doctors. Shipbuilding, machinery and facility sectors cut 38.4 percent of their spending, followed by the service sector with 29.9 percent and the retail sector with 25.1 percent.
Among the top 10 conglomerates, Kia Motors, Hyundai Heavy Industries and Hyundai Mobis unveiled their entertainment expenses, but Samsung Electronics, Hyundai Motor, Korea Electric Power Corp., POSCO, SK Innovation and Samsung Life Insurance did not disclose their spending.
While the anti-graft law has seemingly had a positive influence on large companies, small- and medium-sized enterprises (SMEs) in Korea have experienced a decline in sales.
According to a recent K-Biz survey, 170 among 300 SMEs answered their sales have declined owing to the law's implementation.
The companies said their sales dropped 34.6 percent on average. Six out of 10 SMEs answered the anti-graft law damaged their management.
They also demanded the government raise the price limits for gifts and meals to over 80,000 won and 50,000 won, respectively. This is because the price limits have barred many small companies specializing in flowers and agricultural products from selling their products as gifts.
"Although I acknowledge the anti-graft law's positive effects on our society, it is expected to damage small businesses, resulting in side-effects such as higher unemployment," Rep. Son Kum-ju said. "The government should take measures to support small firms and boost domestic demand."
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