Seoul City to Spend 24.2 Trillion Won in First Half to Restore Livelihoods

In Line with Government's Policy to Strengthen Price Stability and Support for Vulnerable Groups

[Asia Economy Reporter Seong Giho] The Seoul Metropolitan Government announced on the 19th that it will activate the ‘Measures to Revitalize the Livelihood Economy’ to alleviate difficulties across the economy, including vulnerable groups and small business owners, amid the prolonged COVID-19 pandemic and the crisis of the three highs (high inflation, high interest rates, and high exchange rates).

This measure consists of four areas: rapid budget execution to revitalize the livelihood economy, strengthening safety nets to protect vulnerable groups, overcoming crises for small business owners and self-employed individuals and driving domestic demand recovery, and securing growth engines through proactive investment.

First, 24.2 trillion won (62.1%) out of the 39 trillion won budget, which has a significant economic stimulus effect such as large-scale investment projects and goods procurement, will be invested in the first half of the year.

This is intended to focus the annual budget in the first half to promote economic recovery, and the insufficient budget arising from this will be secured through supplementary budgets.

Economic burdens such as transportation and housing costs for vulnerable groups will be alleviated, job supply increased, housing safety nets strengthened, and emergency welfare expanded to enhance protection for vulnerable groups. The planned increase in public transportation fares such as subways and buses, originally scheduled for April, has been postponed to the second half of the year. This aligns with the recently announced government policy direction to reduce expenditure burdens in four major areas directly related to daily life?‘public utility charges, energy charges, communication costs, and financial costs’?and to strengthen support for vulnerable groups.

For energy-vulnerable groups suffering from unprecedented cold waves and soaring energy prices, support for heating costs and home repair assistance to improve energy efficiency in old houses will continue. In January, Seoul provided 34.6 billion won in heating cost support to vulnerable groups, welfare facilities, and senior centers.

Efforts will be made to reduce housing cost burdens for young people and to protect and prevent fraud against victims of jeonse (long-term lease) scams. Food prices will also be intensively managed. For five agricultural products frequently purchased by citizens (radish, napa cabbage, onion, green onion, cucumber), when prices surge compared to the previous year, shipment incentives to farmers at production sites will be increased by 0.15 percentage points from 0.45% to 0.60% of the transaction amount to encourage increased supply at Garak Market.

To alleviate quasi-tax burdens on small car users and small-scale construction contract holders, the scope of exemption from the obligation to purchase urban railway revenue bonds will be expanded, and the interest rate on urban railway bonds will be raised (from 1.0% to 2.5%) to reduce the burden on bond purchasers and holders.

Additionally, in preparation for the contraction of private sector jobs, 190,000 direct jobs will be created for vulnerable groups such as the elderly, disabled, and women, and efforts will be made to strengthen employment stability for low-income workers. In particular, 86.2 billion won will be supported to create 10,360 jobs through the companion job project (formerly the safe job project) targeting vulnerable groups, with 70% of these jobs to be proactively employed in the first half of the year.

To quickly assist those temporarily facing difficulties due to economic contraction, emergency protection safety nets will be strengthened, and measures for economically vulnerable youth facing financial burdens and difficulties in asset formation have also been prepared.

To reduce financial burdens and actively help small business owners and self-employed individuals overcome crises amid weakening domestic demand recovery and the arrival of debt repayment maturities in a high-interest era, a new ‘Safe Interest Rate Fund’ with a low fixed interest rate of 3.7% will be established at a scale of 700 billion won to support 22,000 small and medium enterprises and small business owners. Assuming an average loan of 33 million won per person, this results in an annual interest saving effect of 2.17 million won. In addition, the city will directly identify 1,000 small business owners and self-employed individuals showing crisis signs such as sudden sales declines or increased high-interest loans and support up to 3 million won in recovery costs.

During the COVID-19 period, the city provided rent and management fee reductions and rent payment deferrals totaling 194.1 billion won for small enterprises and small business owners operating in public properties owned by Seoul and its affiliated investment and foundation institutions. In the first half of this year (January to June), the city plans to support about 10,000 stores with rent reductions of 30-40%, management fee reductions, and rent payment deferrals totaling 31.35 billion won.

The city will also sequentially issue ‘Seoul Love Gift Certificates’ worth 589.7 billion won to protect small business owners and reduce household economic burdens. Plans include issuing 500 billion won in district gift certificates, 50 billion won in metropolitan gift certificates, and 20 billion won in delivery-only gift certificates within the year.

Alongside this, in response to the recent decline in construction orders, delays in groundbreaking, and anticipated voluntary investment contraction by the private sector in promising industries, the city will proactively invest in large-scale SOC projects, securing competitiveness for startup companies, and fostering new growth industries to secure future growth momentum.

In particular, large-scale project plans such as the restructuring of Gyeongbu and Gangbyeonbuk-ro, urban railway network construction, Hangang Renaissance 2.0, Suseo train depot development, Yongsan International Business District creation, and redevelopment and reconstruction plans will be announced. The city will also actively play a role as a catalyst to attract private investment in the real estate and construction markets by timely advancing major city-commissioned construction projects according to schedule.

Meanwhile, the city will focus on advancing the startup ecosystem so that the growth momentum of startups enduring the investment winter in the difficult economic situation does not falter. It will also help competitive domestic companies overcome the crisis through overseas market development and support for overseas expansion.

The Seoul Metropolitan Government hopes that the measures announced today will provide some support to vulnerable groups as well as small business owners and self-employed individuals, and stated that it will continue to carefully monitor and manage the overall livelihood economy so that citizens’ lives can regain vitality as soon as possible.

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