Service Industries 1 Trillion in Support

The administration has decided to lend 1 trillion won to service industries as part of the plan to stimulate the domestic economy. The service industries will also receive the same level of tax benefits as the manufacture industries.

The administration and the Democratic Party held a meeting of high party officials, including the deputy premier and Finance and Economy minister, Jin Nyum and the Democratic Party chairman of the Policy Committee, Kang Hyun-Wook, on the morning of the 19th and announced the `Financial and Tax Support Plan for Service Industry Development`.

The administration will lend 1 trillion won to transportation, warehousing, communications, business consulting, entertainment, cultural and sports related industries and other active service industries through various government financial organizations such as the Industrial Bank of Korea, Credit Guarantee Fund, Korea Technology Credit Guarantee Fund.

Furthermore, service industries will qualify for Korea Bank`s sum cap loans, which have traditionally been set aside for manufacture industries, and for mid and small size business funds for opening and promoting the enterprise. Sum cap loans are bank loans to manufacture industries which give a 2.5 percent lower annual interest rate on half the amount. The annual interest comes out to be around 6 percent which is 3-4 percent lower than the average rate for loans. The cap is 11 trillion 600 billion won.

Mid and small size businesses who receive tax benefits will now qualify for special investment tax deductions which will benefit design, movie, video, science and technology, public performance, news media and other service industries.

Furthermore, sports arena and facility businesses, sports and entertainment leasing services will be exempt from various regulations on consumerist service businesses. The decision also proposed that technical training centers fall under mid and small sized business tax break provisions and tax deductions applied to tuitions.

Kwon Soon-Hwal shkwon@donga.com