FedChamber: "Temporary Exclusion of Mandatory Mart Closures, Local Tax Reduction for Aircraft Needed"

'Emergency Proposals to Overcome Industrial Crisis'
Support Requests for Distribution, Aviation, Tourism, and Medical Sectors

[Asia Economy Reporter Dongwoo Lee] The Federation of Korean Industries (FKI) announced an "Urgent Proposal for Overcoming the Industrial Crisis" on the 15th to respond to the damage caused across industries by the spread of the novel coronavirus infection (COVID-19). The proposal included temporarily exempting mandatory closures of marts, supporting travel cancellation fees, and other support measures for five major sectors including distribution, aviation, tourism, medical and bio industries, and the overall industrial sector.

Temporary exemption of mandatory closures for marts and allowance of online orders= The FKI argued that the mandatory closure regulations for large marts should be temporarily suspended amid the COVID-19 situation. They explained that sales have plummeted, and temporary closures due to confirmed cases visiting stores have further impacted sales. They emphasized the need for measures such as excluding mandatory closure days during temporary closures caused by quarantine measures.

Additionally, they proposed allowing online delivery and orders on mandatory closure days. Currently, large marts are prohibited from online operations on mandatory closure days, and considering the current situation where minimizing visits to crowded areas is necessary, measures should be taken to enable online orders and delivery on these days.

Reduction of fixed costs such as aircraft property tax and airport parking fees= The aviation industry, hit hard by Japan's export restrictions and the direct impact of COVID-19, stressed the urgent need for measures to minimize fixed costs and enhance the effectiveness of support policies. While major countries such as the U.S., Japan, and China are reducing or exempting acquisition and property taxes on aircraft, Korea is the only country where local tax reductions on business aircraft have been reduced, exacerbating difficulties. The FKI argued that revising local tax laws to reduce acquisition and property taxes on business aircraft is necessary not only to overcome the crisis but also to ensure fair competition with foreign airlines.

Furthermore, they called for bold and effective support measures for airlines facing a surge in flight suspensions and accumulating revenue losses due to strengthened entry controls. Examples include emergency management stabilization funds with unsecured long-term low-interest loans similar to those provided after the 9/11 terrorist attacks, reductions in airport usage fees (landing fees, parking fees, lighting fees, etc.), and exemptions from domestic aviation fuel import surcharges.

Support for the travel industry including travel cancellation fee assistance= With strengthened entry restrictions by foreign countries, the travel industry is facing increased burdens due to a surge in travel cancellations. However, despite a sharp rise in consumer complaints related to cancellation penalties, there are no separate government measures. The FKI argued that considering the small-scale nature of the tourism industry, temporary support for overseas travel cancellation fees and other incurred expenses should be considered to help overcome the crisis and normalize the industry. Activation policies could include tax support measures such as expanding income deduction limits for domestic travel accommodation expenses and establishing legal and institutional grounds for innovative tourism industries like shared lodging.

Active consideration for full introduction of telemedicine= The FKI stated that the COVID-19 crisis highlights the need to actively consider the full introduction of telemedicine, which has only been conducted as a pilot project in Korea for over 20 years. Although the government temporarily allowed telemedicine from the 24th of last month in response to the COVID-19 situation, results have been minimal. As community infections intensify and medical staff infections increase, telemedicine is essential to prevent further spread, but doctors' participation remains low. They explained the need to improve the system so that major hospitals cannot refuse telemedicine if patients wish, and to actively consider the introduction of telemedicine.

They also advocated expanding tax credits for pharmaceutical facility investments. To enhance infectious disease response capabilities like COVID-19, expanding investment support and deregulation in the pharmaceutical and bio industries is essential. However, the FKI pointed out that since the introduction of the facility investment tax credit system in 2007, tax credits for pharmaceutical facility investments have been continuously reduced. Considering that it takes at least five years to generate profits from new pharmaceutical production facilities and the high-risk, high-return nature of the new drug development market, reducing the burden of facility investments from a mid- to long-term perspective is essential to encourage active industry investment.

Labor and tax support measures needed across industries= They also pointed out the need for labor and tax support measures to improve the deteriorated business environment across industries. In situations where special extended work hours are unavoidable to minimize production disruptions such as mask production, the reasons for approval of special extended work hours are narrow and the procedures are complicated, causing difficulties for companies to utilize them. Flexible operation of the approval system, including broad recognition of reasons, is necessary so companies can respond appropriately to on-site situations.

They further argued for allowing extension of the unit period for the flexible working hours system and actively considering the revival of temporary investment tax credits, which have a strong incentive effect on investment, to revive investment sentiment in the private sector that has been in decline for six consecutive quarters.

Yoo Hwan-ik, Director of Corporate Policy at the FKI, said, "Since the WTO's pandemic declaration, global stock markets including Korea have plummeted, raising concerns about a pandemic phenomenon across the economy and industry." He added, "Along with bold deregulation measures by industry, support plans should be actively prepared to help industries currently facing difficulties overcome the crisis."

This content was produced with the assistance of AI translation services.