[2021 Economic Policy] COVID-19 Cases Surpass 1,000... Ineffective Consumption Measures Announced

Distributed Hosting of Consumer Events like Korea Companion Sale and Korea Sale Festa
Expansion of Transportation, Accommodation, and Infrastructure in 5 Key Tourist Hub Cities
Support for 'Korea Total Tourism Package' for Foreigners Arriving at Regional Airports

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Although the government has announced consumption stimulation measures based on stable quarantine conditions, concerns are emerging that the actual policy effects may be limited amid the worsening resurgence of COVID-19. Hastily promoting face-to-face consumption could also create gaps in quarantine measures.

On the 17th, the government announced consumption activation measures to boost the domestic economy through the "2021 Economic Policy Direction." The government’s initiatives, premised on quarantine stability, include ▲Korea Together Sale and Korea Sale Festa ▲expansion of transportation and accommodation infrastructure in five key tourism hub cities ▲introduction of the Korea Total Tourism Package for foreigners entering through regional airports.

Whether these measures can actually be implemented without established quarantine stability criteria remains uncertain. Regarding this, Kim Yong-beom, First Vice Minister of the Ministry of Economy and Finance, stated, "We do not have mechanically set quarantine stage criteria," and added, "We will closely consult with the Central Disease Control Headquarters (CDCH)."

The government plans to promote the Korea Together Sale in the first half of this year, involving large and small retail businesses and small merchants in traditional markets. Additionally, it will actively support the Korea Sale Festa, a large-scale shopping event led by the private sector. The government also plans to differentiate tourism hub cities such as Busan, Gangneung, Jeonju, Mokpo, and Andong by expanding transportation and accommodation infrastructure. Furthermore, three new smart tourism cities will be designated next year.

The Korea Total Tourism Package will be introduced to provide customized support linking tourism, transportation, and accommodation for foreigners entering through regional airports. The government plans to select two local governments from Busan, Daegu, Chungbuk, Jeonnam, and Gangwon through a future public contest. It will operate transportation hub tourist information centers and promote leisure sports tourism.

In academia, concerns are being raised that consumption measures based on quarantine stability may become practically ineffective as the number of new COVID-19 cases again exceeds 1,000.

Professor Kim So-young of Seoul National University’s Department of Economics said, "Consumption coupons have repeatedly been suspended and resumed due to the spread of COVID-19," adding, "Since face-to-face consumption is limited under COVID-19 conditions, it would be more effective to save fiscal resources now and double economic stimulus when COVID-19 is somewhat over." Professor Kim Sang-bong of Hansung University’s Department of Economics stated, "Criteria for quarantine stability must be established to implement consumption measures."

The government also plans to provide additional income tax deductions on the increased amount of credit card usage compared to the previous year during next year. If credit card spending increases by more than 5% compared to this year, an additional 10% deduction will be applied on top of the existing card deduction rate of 15-40%. However, the deduction limit will be set at 1 million KRW.

However, concerns remain that the actual effect of increased consumption through deductions will not be significant. Professor Kim said, "While the form of consumption can be shifted to credit cards, people do not increase spending just because of deductions," adding, "Ultimately, it is more of a fiscal waste than consumption stimulation."

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