Profit-making Schools, Establishing Hospitals Allowed

A measure is under way to give priority to the small scale self-employed in setting up their businesses or working in the discount store in question when they have lost their turf to mega-scale discount stores.

Tax breaks will be expanded on private medical insurance such as cancer and accidental injury insurance.

Also, more small- and medium-sized companies in the service sector will benefit from government funding, which is limited to fewer than 50 businesses currently.

On March 8, the government held the first service-related ministerial meeting chaired by Prime Minister Lee Hae-chan at the Central Government Complex building in Sejong-ro, Jongno-gu, Seoul, and finalized this year’s initiatives to strengthen the competitiveness of the service industry.

Support for Small-sized Self-employers-

When establishing mega-scale discount stores or retail stores, small-scale merchants in the region will be given preference in setting up shops or obtaining jobs.

Newly-built mega stores will see their restrictions on road construction and expansion eased and incentives such as traffic congestion penalty cut while being aggressively encouraged to accommodate or hire small scale self-employers.

Adding Values to the Medical Industry-

Tax breaks on private medical insurance will be expanded, and medical procedures performed with advanced medical equipment will also be covered by health insurance. The government is also pushing for plans to allow foreign investors such as medical investment funds to rent hospitals after their establishment.

Legal Service to be Upgraded-

Hiring foreign lawyers or joint ventures with foreign legal firms will be allowed in stages.

Facility Construction in School Sites-

Under the condition of transferring their ownership, foreign investors will be approved to rent school buildings for a certain period of time after the establishment. In addition, facilities for public good such as community gyms will be authorized for construction on school sites. Under the current law, school buildings and sites must be owned by school only.

Daycare Service-

In order to encourage child birth and female participation in the economy, fees will be raised in daycare centers subject to the government’s charge regulations. Instead, government financial support for daycare charge will be increased for the underprivileged.

Would It Work?-

The government plans to organize a task force under relevant ministries by sectors and announce concrete measures and a time frame within the first half of this year.

However, challenges lie ahead since many of the measures unveiled this day have been prevented from being introduced due to differences between ministries and NIMBY. Some also point out that the released schemes lack reality in that they are merely an array of measures without coherence.

Oh Joon-seok, a service analyst and accounting information professor at Woongji Accounting and Tax College, noted, “Fundamental competitiveness must be enhanced to nurture the service industry,” and added, “Giving priority to local small-scale merchants to do business in mega-scale discount stores may only disrupt the market mechanism and cause negative effects.”

Chi-Young Shin Chang-Won Kim higgledy@donga.com changkim@donga.com