Park Il-ho, Mayor of Miryang, "Issuing Local Gift Certificates Should Go Exactly Where Citizens Want"

Issuance of 80 Billion KRW with 10% Discount Rate Next Year, Other Local Governments Plan Reduction
Over 90% of Milyang Small Business Owners and Citizens Say "Gift Certificates Contributed to Economic Revitalization"

Park Il-ho, mayor of Miryang City, Gyeongnam, is explaining the position on the issuance of Miryang local love gift certificates while taking notes in his office. / Photo by Kim Wook assa113@

[Asia Economy Yeongnam Reporting Headquarters Reporter Kim Wook] “If it enhances efficiency by preventing the outflow of regional consumption (funds) compared to investment and revitalizes the economy of Miryang City, we must do whatever it takes. Even without central government support, 90% of Miryang citizens prefer and positively evaluate the issuance of local gift certificates, so we will not stop issuing them.”

The government has completely cut the budget for issuing local currency in next year’s budget proposal. The reasons cited are ▲local currency is a unique task of local governments ▲local currency contributes little to revitalizing the local economy ▲it is a ‘temporary’ policy to help small business owners hit hard during the COVID-19 phase.

Amid concerns voiced from various sectors, some local governments are busy preparing countermeasures, such as drastically reducing the issuance limits and discount rates of gift certificates. Some local governments in Gyeongnam announced plans to reduce issuance amounts and lower the gift certificate purchase discount rate from 10% to a minimum of 5% and a maximum of 8%.

However, the stance of Park Il-ho, mayor of Miryang City in Gyeongnam, is different.

“If issuance is stopped or reduced, or the discount rate is lowered, it is natural that citizens’ purchase and usage rates of local gift certificates will significantly drop, leading to decreased sales for small business owners.”

Mayor Park said, “Miryang City will issue 80 billion KRW worth of Miryang Local Love Gift Certificates next year, the same level as this year. The discount rate will also remain at 10%.” He expressed confidence in the success of local gift certificate issuance, saying, “If issuing 80 billion KRW generates an economic inducement effect of 280 billion KRW, isn’t it obvious that we should do it?”

He continued, “Since Miryang citizens and small business owners want this, as mayor, I have no reason to stop or reduce it,” showing a firm will to “issue with the same limit and discount rate as this year next year as well.”

Mayor Park added, “With a considerable number of people shopping at department stores and large marts in nearby cities like Changwon, Busan, and Daegu, if local gift certificates are not available, it will even cause a hollowing-out phenomenon in the local commercial district.”

What is the basis of Mayor Park’s confidence?

Miryang City Local Love Gift Certificates (hereafter, local gift certificates) were issued at 5 billion KRW in 2019 when the COVID-19 pandemic just began, 50 billion KRW at its peak in 2020, 78 billion KRW in 2021, and 83 billion KRW in 2022. This year, after supplementary budgeting, an additional 6 billion KRW will be issued, totaling 89 billion KRW planned.

Of the total 200.5 billion KRW sold until September this year, the total redemption (actual use) was 184.8 billion KRW (92%), an astonishing record of direct economic effect gained by Miryang City.

When applying the 2013 regional input-output table’s private final consumption production inducement coefficient (1.76), value-added inducement coefficient (0.77), and employment inducement coefficient (1.67), the indirect economic inducement effect over four years with 216 billion KRW issued is analyzed as a production inducement amount of 380.1 billion KRW, value-added inducement amount of 166.3 billion KRW, and employment inducement of 3,607 people.

In other words, issuing 80 billion KRW this year alone generated a total economic inducement effect of 280 billion KRW. [Miryang City analysis data]

Over 90% of small business owners and Miryang citizens respond positively; issuance over 100 billion KRW expected next year

Analysis Table of the Results from the Online and Offline Survey Conducted by Miryang City for One Week Starting August 16 (Number of Respondents: 3,502)

Then, what reactions and evaluations do small business owners and citizens sensitive to local gift certificate issuance have?

Miryang City conducted an online-offline survey from August 16 for one week (3,502 respondents), finding that over 90% responded positively that “gift certificates have an economic revitalization effect,” and that “about 100 billion KRW issuance is desired next year,” analyzing that “there is a need to strengthen the positive functions of local gift certificates such as improving the livelihood of the working class and increasing small business owners’ income.” [See table]

Regarding the central government’s budget cut for local gift certificate issuance, Mayor Park Il-ho stated, “If issuance is stopped or issuance amount and discount rate are reduced due to lack of government support, the damage will directly lead to decreased sales for small business owners and stagnation of local alley markets,” and emphasized, “As mayor, I will not stop a policy that the majority of citizens want,” clearly stating that local gift certificates will be issued at this year’s level next year as well.

Voices are growing louder that the positive functions of local currency, introduced to prevent the outflow of local consumption and to revitalize small business owners and the local economy, should not be ignored.