Retail, golf, liquor to be hit by anti-graft law
Golf clubs are expected to be hit hard by the anti-graft law, dubbed the Kim Young-ran Act that goes into effect Sep. 28. Public officials, private school teachers, journalists and their spouses should not be given a meal that costs more than 30,000 won ($26) or receive gifts priced over 50,000 won. / Yonhap
By Jhoo Dong-chan
Department stores, golf courses, liquor makers and hotels are expected to be hit hard by the anti-graft law as businesses and individuals cut down on high-priced luxury items and services, according to industry analysts, Friday.
In contrast, screen golf operators, convenience stores and cinemas, some of the businesses that deal with mostly low-priced items, will likely benefit from the so-called Kim Young-ran Act, as companies and individuals increase spending on these products and services.
Beginning Sept. 28, public officials, private school teachers, journalists and their spouses should not be given a meal that costs more than 30,000 won ($26) or receive gifts priced over 50,000 won. Congratulatory or condolence money should be less than 100,000 won.
Around 4 million, or 8 percent of the total population of 50 million, will be subject to the act.
With only two months before the law goes into effect, the nation’s leading retailer, Hanwha Galleria, will focus on small gift products to meet the regulations.
“It’s unclear how it influences our sales since the act hasn’t been put into in effect yet,” a Hanwha Galleria official said.
“Hanwha Galleria will prepare a total of 424 gift products under 50,000 won ($42) to meet the regulation.”
Lotte Department Store has also adjusted its price policy for the law.
“We will increase gift products under 50,000 won ($42) by 30 percent,” a Lotte official said.
“Fruit gift sets will be divided into smaller quantities to satisfy the 50,000 won regulation upon the Chuseok holiday.”
The nation’s stock farms and fishermen are expected to suffer most since many beef and dried corvina products cost over 50,000 won.
According to a Ministry of Agriculture, Food and Rural Affairs report to Cheong Wa Dae, there will be a maximum 2.3 trillion won drop in sales of agricultural and marine products after the law is implemented.
In contrast, small convenience stores and screen golf clubs are expected to enjoy sales growth.
“Public officials are no more able to enjoy expensive golf sessions in the field,” a screen golf club owner surnamed Ahn said.
Despite gloomy forecasts, shares in department stores remained almost the same after the Constitutional Court’s decision on the new law was announced Thursday. Shares of Shinsegae and Hyundai Department Store fell only 0.27 percent and 0.78 percent, respectively, Thursday. Lotte Shopping shares increased 0.26 percent to 196,500 won.
“Shares in department stores have already suffered huge losses due to a global downturn and decline in demand,” a Daishin analyst said. “It looks like investors believed their shares have already hit bottom.
“I don’t really think the stock market will suffer losses due to the anticorruption law. Instead, people will soon find a way to take advantage of loopholes in the law.”