Promotion of Accounting Indicator Development for Sangjo Industry... Initiating Advancement of K Funeral Services

Emergency Economic Ministers' Meeting and Export Investment Measures Meeting
Initiating Advanced K Funeral Services, Overhauling Legal System Overall

The government is set to develop accounting indicators specialized for the K-Sangjo industry. Unlike insurance companies, the advance payments received by Sangjo companies are recorded as liabilities in accounting, causing most of them to be in a state of capital erosion.

On the 27th, the government held an emergency economic ministers' meeting combined with an export strategy meeting and announced the "Policy Tasks for the Development of the Funeral Industry" as part of the "Living Service Development Plan." It decided to improve the legal system, which currently focuses only on consumer protection, by reflecting the requests from the Sangjo industry.

Due to aging demographics, demand for funeral services is continuously increasing. The number of deaths was 300,000 in 2020, expected to rise to 410,000 by 2030 and 700,000 by 2070. However, the legal framework for domestic Sangjo companies is generally deemed insufficient. A Ministry of Economy and Finance official explained, "As of 2023, the Sangjo industry has rapidly grown to encompass 8.27 million subscribers, but there are no regulations to enhance the professionalism of workers. We see the need for a legal system reform to address this."

First, the government will develop accounting indicators specialized for Sangjo companies. Unlike the insurance industry, the advance payments (amounts received in advance for orders of construction or products) received by Sangjo companies are recognized as liabilities under general accounting standards. As a result, most Sangjo companies appear to be in a state of capital erosion, facing difficulties in raising new funds. The government aims to develop accounting indicators suited to the industry's characteristics to clearly record revenues.

Specific procedures for handling graves whose installation periods have ended will also be established. Regarding "graves installed before 2001," which are difficult to manage under the current Funeral Services Act, the government is considering amending the act to apply the statutory installation period (30 years) and allow local government heads to handle them according to procedures once the installation period expires. Currently, there are no related regulations, and the industry has raised concerns about difficulties with old grave sites.

The permit procedures for developing natural burial sites within cemeteries will be simplified. The government plans to integrate the existing cemetery area change permit and natural burial site creation permit into a single review process and exempt common documents to streamline the approval process. Additionally, for unclaimed graves, legal grounds will be established to allow the Ministry of Health and Welfare or local governments to access family relation registries during investigations of relatives.

The government is also considering legislating a "Sangjo Company Recruiter Registration System" to prevent damages caused by poor product information provided by recruiters who operate autonomously. The system would be introduced under the Installment Transactions Act to prevent unsound sales activities. Currently, the recruiter registration system is operated mainly by Sangjo companies, limiting its activation. Furthermore, the government plans to explore building an integrated platform to check individual payment amounts, payment frequency, and financial information of Sangjo companies.

Moreover, an excellent certification system for funeral facilities will be introduced along with incentive payment plans. Procedures and support grounds for designating national disaster funeral halls will be stipulated in the Funeral Services Act, and a platform for providing funeral service-related information will be established and enhanced. Cabinet-type cremators will be introduced to improve cremation facility efficiency. Research and investigation into new corpse disposal methods linked to new funeral methods such as mountain fountain burial and marine burial will also be pursued.