[Exclusive] Chanel Stores, Starbucks, and IKEA Do Not Accept National Support Fund

Chanel, Louis Vuitton and Other Luxury Brand Stores Excluded
Nonghyup Hanaro Mart Usable Only at Local Love Gift Certificate Affiliates
President Moon: "Second Supplementary Budget to Be Swiftly Executed from Next Week"... Financial Support Measures Also Considered

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The government has decided to exclude Starbucks and IKEA from the COVID-19 coexistence national support fund usage locations. Earlier, the government decided to provide 250,000 KRW per person to 88% of the population starting at the end of this month as part of the second supplementary budget, and it has now settled on excluding large foreign chain stores from the usage locations. Luxury brand stores such as Chanel, which were included in last year's nationwide disaster relief fund usage, will also be excluded, and Nonghyup Hanaro Mart, whose classification as a large supermarket is ambiguous, will only allow the use of support funds if registered as a local love gift certificate affiliated store.

According to the Ministry of Economy and Finance and the Ministry of the Interior and Safety on the 10th, the COVID-19 coexistence national support fund interdepartmental task force (TF) plans to announce the "Detailed Criteria and Usage Locations for the National Support Fund" including these details next week.

A government official stated, "We have decided to exclude foreign large distribution companies such as Starbucks and IKEA, as well as luxury brand stores, from the usage locations," adding, "We are considering a plan to encourage consumption in local small businesses and small merchants by linking usage with local gift certificate affiliated stores." Accordingly, it is expected that usage will be possible at small and medium-sized stores with annual sales under 1 billion KRW.

This measure follows criticism that last year's nationwide disaster relief fund excluded Starbucks, IKEA, and independent luxury brand stores from regulation, which undermined the original intent to support small business owners. Last year, large supermarkets, department stores, online malls, large electronics retailers, entertainment businesses, golf courses, karaoke rooms, lottery shops, and duty-free shops were excluded from usage locations.

Professor Andonghyun of Seoul National University’s Department of Economics said, "Since the policy's purpose is to help small business owners and self-employed individuals, it is appropriate to exclude foreign large corporations."

Only Nonghyup Hanaro Mart stores registered as local love gift certificate affiliated stores can use the support fund

Using the disaster relief fund at Nonghyup Hanaro Mart will become more complicated. The government has decided to impose the condition that Hanaro Mart must be an affiliated store of the local love gift certificate to allow usage. Usage will be impossible in major cities like Seoul where the store is not registered as an affiliated store.

This measure also reflects awareness of criticism that it does not align with the purpose of revitalizing local small businesses. For example, Hanaro Mart Yangjae branch saw a 36% increase in sales within two days after the disaster relief fund was distributed in May last year compared to the same period the previous year.

A government official said, "It will not be possible to use the disaster relief fund at Hanaro Mart stores in major cities such as Seoul," adding, "However, in small and medium-sized cities where large supermarkets are lacking, there are concerns that excluding Hanaro Mart from usage locations would reduce convenience for citizens, so limited usage will be allowed."

The government plans to allow the use of support funds at traditional markets, neighborhood marts, gas stations, restaurants, convenience stores, hospitals, pharmacies, beauty salons, opticians, bookstores, stationery stores, daycare centers, kindergartens, and academies, as was the case last year.

Credit Card Cashback: "Delivery Apps OK, Online Malls NO"… Launched Considering Quarantine Situation

The coexistence consumption support fund (credit card cashback) program is planned to start next month considering the quarantine situation. This program refunds 10% of the excess amount if credit or debit card usage exceeds the average monthly card usage in the second quarter by more than 3%. The maximum support amount is 200,000 KRW per person.

The government has decided to include sales from delivery apps in the coexistence consumption support fund but exclude online consumption. Delivery apps mainly involve the food industry and are judged to enhance user convenience. On the other hand, online malls, which include many durable goods and large corporations, are set to be excluded.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated on the 15th of last month, "When creating the credit card cashback, the main purpose was to encourage consumption in local small businesses, self-employed individuals, and small merchants' restaurants rather than department stores, specialty stores, or luxury brand stores," adding, "Delivery apps can be included after consideration."

Meanwhile, the government is expected to accelerate the execution of the Small Business Hope Recovery Fund and the national support fund. President Moon Jae-in recently stated at a senior secretaries meeting, "Starting next week, we will swiftly support those affected through the execution of the supplementary budget and do our best to devise support measures to alleviate financial burdens and difficulties."