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Uncertainty overhangs pick of new duty-free operators

Dec. 6, 2016 - 11:25 By 임정요

With an announcement some 10 days away, a thick cloud of uncertainty hangs over South Korea's selection of new duty-free shop operators due to a litany of variables, industry sources said Tuesday.

The Korea Customs Service (KCS) is slated to announce four new operators for duty-free shops in Seoul and two others in provincial cities on Dec. 17, with the nation's five major retailers in the running. One of the four licenses in the capital has been allotted to a small or medium enterprise, leaving only three available to big businesses.

This undated combined image shows Choi Soon-sil, the woman at the center of a deepening graft and influence-peddling scandal, against the backdrop of a local duty-free shop. (Yonhap)

According to the sources, the customs office has picked the date because it has to complete the selection of new operators no later than Dec. 20 in line with related regulations.

In the run-up to the scheduled announcement, the five major retailers -- Lotte Duty Free, SK Networks, Shinsegae DF and HDC Shilla Duty Free -- are reportedly making final-stage preparations, with CEOs likely to attend presentations in a desperate bid to win the much-coveted licenses.

Some industry watchers, however, said it remains to be seen whether the KSC announcement will take place as planned, given a snowballing corruption and influence-peddling scandal involving President Park and her longtime confidante Choi Soon-sil.

Opposition parties have agreed to impeach Park over her alleged involvement in the scandal with a vote scheduled for Friday. In addition, an independent council has been appointed to investigate the case for at least three months.

A parliamentary probe is under way with the heads of eight major conglomerates attending a hearing Tuesday on their donations to two foundations controlled by Choi. Lotte Group Chairman Shin Dong-bin and SK Group Chairman Chey Tae-won were present.

The process of picking duty-free shop operators has been under flak for the lack of transparency, sparking speculation that there is something other than business appraisals in play.

A decades-long friend to President Park, Choi is accused of capitalizing on their ties to amass a fortune and exert undue influence over government affairs despite having no official government position.

Indeed, speculation has been swirling that the government selection of new duty-free shops may be scrapped or delayed in the wake of the nation-rocking scandal.

With the selection of new operators remaining murky, industry officials complain about no progress in extending the duty-free license period to 10 years from the current five years. A related bill has been languishing in the National Assembly. The bill was prepared after both Lotte and SK failed to renew one of their duty-free licenses, but the scandal has hampered the bill's parliamentary passage.

"At the moment, all things are too uncertain with the business environment becoming unfavorable to duty-free shops due to the political problem," an industry source said. "Any government policy should be consistent so as to induce corporate investment and employment." (Yonhap)