Seoul Covered by Distribution Regulations, 81% of Non-Green Areas Subject to Restrictions

[Asia Economy Reporter Kim Hyewon] It has been revealed that 81% of the area in Seoul, excluding green spaces, is subject to distribution regulations. Local government heads can designate traditional commercial preservation zones, where the opening of retail stores is restricted within a 1km radius from the boundaries of traditional markets, thereby limiting the establishment of large-scale and semi-large-scale stores.

According to the status of distribution regulation areas in Seoul announced by the Federation of Korean Industries (FKI) on the 1st, the area designated as traditional commercial preservation zones in Seoul was identified as approximately 301㎢.

This corresponds to 49.7% of Seoul’s total area of 605.6㎢. Compared to the area by land use in Seoul, it is more than 11.7 times larger than the commercial area (25.6㎢), nearly equivalent to the residential area (326.0㎢) at 92.3%, and accounts for 81.0% of Seoul’s area excluding green spaces (234.1㎢), which is 371.5㎢.

The FKI argued that considering both regulated areas and profitability, it would be very difficult to open additional large marts in Seoul under the current 1km regulation.

Seoul City Distribution Regulation Area (Current: Within 1km radius of traditional markets)

When the scope of the traditional commercial preservation zone is expanded to within 2km from the boundary of traditional markets to strengthen distribution regulations, the area of the traditional commercial preservation zone was found to be 502.6㎢. This corresponds to 83.0% of Seoul’s total area of 605.6㎢.

Compared to the area by land use in Seoul, it is more than 19.6 times larger than the commercial area and more than 1.5 times larger than the residential area. It is also more than 1.3 times larger than Seoul’s area excluding green spaces, effectively making almost the entire city of Seoul a regulated area.

The FKI explained that even if the traditional market preservation zone is expanded from a 1km radius to 2km, almost the entire city of Seoul would be subject to distribution regulations, restricting the opening of retail formats preferred by consumers.

In the National Assembly, bills to further strengthen distribution regulations are emerging one after another. A bill to expand the regulated area from the current 1km radius to 20km is awaiting discussion in the relevant committee. There are also bills pending that would expand the regulation targets beyond large marts to include complex shopping malls, department stores, and duty-free shops.

The FKI expressed concern that if the bills to strengthen distribution regulations under discussion pass the National Assembly, it would become practically impossible for large distribution companies such as large marts and complex shopping malls, which consumers prefer, to open stores, thereby reducing consumer welfare. It is also expected that small business owners leasing stores in large shopping malls and large marts will inevitably suffer damage.

Yoo Hwan-ik, Director of Corporate Policy at the FKI, pointed out, "Rather than discussing further strengthening of distribution regulations now, it is necessary to first analyze the policy effects of existing regulations on store openings and business operations." He added, "For the development of the distribution industry, it is time to avoid regulations on specific offline retail formats considering the changing distribution market environment and to prepare measures that allow online and offline markets to develop harmoniously."

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