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SOUTH KOREA. The government this month released application details for new downtown duty free licenses it is creating in 13 provinces in order to help accommodate the increasing demands of foreign tourists.
This development follows October’s decision by Customs to reject proposals for “˜foreigner-only’ duty free shops to be run only by small and mid-sized companies instead of existing travel retailers. Instead it promised such enterprises the opportunity to bid for new duty free trading licenses in a number of Korean cities. Each will focus mainly on selling Korean goods.
The provinces are Incheon, Daegu, Gwangju, Daejeon, Ulsan Incheon, Gyeonggi-do, Gangwon-do, Chungcheongbuk-do, Chungcheongnam-do, Jeollabuk-do, Jeollanam-do, Gyeongsangbuk-do and Gyeongsangnam-do
The desire to exclude the country’s largest travel retailers, such as Lotte, Shilla and Paradise, from the bidding is linked to sensitivities over the all-encompassing influence of their parent chaebols (conglomerates) that dominate the Korean economy.
Applicants will be judged according to a 100-point rating system, based on business operating principles (30 points); commercial plan (30); potential local economic contribution (20) and bonded warehouse capabilities (20).
Companies such as Daegu (a mid-size department company) in Daegu City are believed to be likely applicants for the new enterprises.
One informed local observer said that on top of the provincial licences, further permits may be granted in Seoul and on the island of Jeju due to booming demand, particularly from Chinese tourists.
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