"Save Us"... Small Business Owners and SMEs Appeal for Government Support

On the 19th, at Terminal 1 of Incheon International Airport, passengers arriving on a flight from London, UK, are exiting the gate as the government decided to apply 'special entry procedures' to all overseas arrivals regardless of their point of departure to prevent the influx of COVID-19. Photo by Moon Honam munonam@

[Asia Economy Reporter Seungjin Lee] Although the government has introduced financial support measures targeting small business owners, self-employed individuals, and small and medium-sized enterprises (SMEs), voices of dissatisfaction still emerge from the field. In particular, duty-free shop operators, who have been hit hard by the novel coronavirus disease (COVID-19), as well as convenience store owners experiencing a recent sharp decline in sales, have demanded direct government support measures.

The Incheon Airport Small and Medium-sized Enterprise and Mid-sized Enterprise Association announced on the 21st that it sent an official letter to Incheon International Airport Corporation on the 19th requesting support for SME and mid-sized enterprise duty-free shops. The association demanded rent reductions, such as setting rent based on operating rates for up to six months, or rent exemptions during business closures. They also requested that duty-free shops in the arrival area be charged rent based on the basic rate.

Previously, the government decided to reduce rent by 25% for six months for duty-free shops operated by small business owners and SMEs. Nevertheless, SME and mid-sized enterprise duty-free shops requested additional government support because the sharp decline in airport passengers has led to rent costs amounting to several times their sales.

The SME and Mid-sized Enterprise Association estimated that the March sales of four SME and mid-sized duty-free shops?SM, City, Grand, and Entas?located in Terminal 1 of Incheon International Airport would be 1.827 billion KRW. The rent they must pay amounts to about 600 million KRW, making the rent-to-sales ratio 252%. Terminal 2’s rent-to-sales ratio was also estimated to average 200%.

Furthermore, SM and Entas Duty-Free Shops, classified as mid-sized enterprises, were excluded from the government’s rent reduction support measures. For mid-sized and large enterprise duty-free shops, the support was limited to a three-month rent payment deferral. Since mid-sized and large enterprises account for over 95% of the rent at Incheon Airport duty-free shops, there are criticisms that the current support measures are merely superficial.

The SME and Mid-sized Enterprise Association stated, "If rent payments continue to be demanded in places where normal business operations are not guaranteed due to the impact of COVID-19, business rights cannot be returned due to penalty fees, leaving us trapped," adding, "Without a breakthrough, future business sustainability is difficult," and urged the government for additional support.

On the 10th, Myeongdong in Jung-gu, Seoul is quiet due to the impact of COVID-19. Photo by Moon Honam munonam@

Convenience store owners have also demanded government-level support measures, citing a sharp decline in sales due to COVID-19.

On the 20th, the Korea Convenience Store Owners Association announced the "Damage to the Convenience Store Industry Due to COVID-19 and Support Requests." According to them, sales have been continuously declining due to prolonged domestic demand stagnation and excessive franchised store openings. Moreover, as the COVID-19 situation prolongs, convenience stores are experiencing severe deficits.

Despite the sharp drop in sales, fixed costs such as labor costs, rent, electricity bills, and the four major social insurances remain burdensome, making the damage particularly severe compared to other industries.

They explained, "Due to COVID-19 prevention measures such as the government's social distancing campaign, school reopening delays at all levels, and increased telecommuting by companies, convenience stores have seen an overall decrease in sales," adding, "Many convenience stores have seen daily sales fall to around 100,000 KRW."

The association pointed out that although convenience store owners are also small business owners, the government is 'passing over' convenience stores. They said, "The government has announced measures such as VAT reductions for small business owners, and local governments are rolling out various support measures, but convenience stores have not benefited at all," and emphasized the need for effective measures through direct support targeting stores with sharp sales declines.

Accordingly, they called for the government to implement ▲easing of convenience store loan regulations (interest rate reductions, increased limits, extended repayment periods) ▲VAT and income tax reductions ▲expansion of credit card sales tax deductions ▲public utility fee reductions (electricity, water) ▲restoration of job stability funds ▲compensation measures for closed stores ▲and employment retention subsidies.

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