By Choi Sung-jin
Two businesses suffering the bitterest blows from the recent implementation of a strict anti-graft law, called the "Kim Young-ran Act" after its original architect, are expensive restaurants and golf courses.
The membership prices of some golf courses have also fallen to half, even one-third, of their previous levels, industry sources said.
This is because the new anticorruption law allows no exceptions when it comes to entertaining clients, regarding it not as simple gift-giving that should be limited to 50,000 won ($44) but as the offering of benefits.
If the "entertainment on the green" totally disappears, the revenue of golf courses is expected to fall 20 to 30 percent, the sources said. Actually, the reservation rate in the first week after the implementation of the law on Sept. 28 fell 10 percent, they added.
Experts did not expect that membership prices would plunge right away but the sharp drop in demand from businesses will shrink the market. "In the worst-case scenario, Korea can't help but follow the example of Japan, where membership prices plummeted after the government introduced an ethics law for government officials," one expert said.
The trading index of golf course memberships _ an index of Korea's 116 golf course membership prices assuming that of January 2005 is 1,000 _ stood at 682.5 on Thursday, down 38 points, or 5.3 percent, from 720.5 on May 20. The index has been fluctuating around 700 this year but buying has all but disappeared recently, although September and October have been traditionally the strong buying season, they said.
A golf course in Yongin, Gyeonggi Province, for instance, has seen its membership price fall to 10 million won from 30 million won early this year. Another course in Cheongju, 230 km south of Seoul, also experienced a 43.75-percent drop in membership price.
"Usually October is the peak season where membership transactions are briskly conducted but the new law has frozen most of the deals," said an analyst.
"Deals of membership rights in bearer form as preferred by business corporations have completely disappeared and even the prices of memberships held by individuals are falling."
Also embarrassed are businesses that have golf membership to entertain clients, bureaucrats and journalists. "Our golf membership has become useless as the new law prohibits most of the outings for entertaining outsiders," said an executive responsible for the PR department at a chaebol group affiliate. "We will have to give back the membership to the company before long."
Industry watchers are wondering how low the membership prices could fall here.
Japan introduced a similar anticorruption law for public officials in 2000, and the average membership price of 317 golf courses, which reached 48.83 million yen in February 1990, plunged 94.3 percent to 2.48 million yen in June 2003.
Two businesses suffering the bitterest blows from the recent implementation of a strict anti-graft law, called the "Kim Young-ran Act" after its original architect, are expensive restaurants and golf courses.
The membership prices of some golf courses have also fallen to half, even one-third, of their previous levels, industry sources said.
This is because the new anticorruption law allows no exceptions when it comes to entertaining clients, regarding it not as simple gift-giving that should be limited to 50,000 won ($44) but as the offering of benefits.
If the "entertainment on the green" totally disappears, the revenue of golf courses is expected to fall 20 to 30 percent, the sources said. Actually, the reservation rate in the first week after the implementation of the law on Sept. 28 fell 10 percent, they added.
Experts did not expect that membership prices would plunge right away but the sharp drop in demand from businesses will shrink the market. "In the worst-case scenario, Korea can't help but follow the example of Japan, where membership prices plummeted after the government introduced an ethics law for government officials," one expert said.
The trading index of golf course memberships _ an index of Korea's 116 golf course membership prices assuming that of January 2005 is 1,000 _ stood at 682.5 on Thursday, down 38 points, or 5.3 percent, from 720.5 on May 20. The index has been fluctuating around 700 this year but buying has all but disappeared recently, although September and October have been traditionally the strong buying season, they said.
A golf course in Yongin, Gyeonggi Province, for instance, has seen its membership price fall to 10 million won from 30 million won early this year. Another course in Cheongju, 230 km south of Seoul, also experienced a 43.75-percent drop in membership price.
"Usually October is the peak season where membership transactions are briskly conducted but the new law has frozen most of the deals," said an analyst.
"Deals of membership rights in bearer form as preferred by business corporations have completely disappeared and even the prices of memberships held by individuals are falling."
Also embarrassed are businesses that have golf membership to entertain clients, bureaucrats and journalists. "Our golf membership has become useless as the new law prohibits most of the outings for entertaining outsiders," said an executive responsible for the PR department at a chaebol group affiliate. "We will have to give back the membership to the company before long."
Industry watchers are wondering how low the membership prices could fall here.
Japan introduced a similar anticorruption law for public officials in 2000, and the average membership price of 317 golf courses, which reached 48.83 million yen in February 1990, plunged 94.3 percent to 2.48 million yen in June 2003.
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