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Rents, commissions lowered as virus rages through economy

Large firms, building owners volunteer to share burden as vendors suffer, Finance Ministry pledges to reimburse

As the economy in Korea shoulders headwinds from weakened consumer sentiment due to the coronavirus spread, a number of companies and building owners are coming up with self-rescue measures to help prop up the ecosystem.

Telecom giant KT announced Thursday it will reduce rents for three months for self-employed business owners at its buildings across the nation, which it believes will cost it 2.4 billion won ($1.97 million).

KT said it wished to take on the social responsibility of sharing the financial burden that the small and medium-sized enterprises would be going through.

KT currently has 6,330 tenants, of which it believes 3,596 will apply for the rent reduction due to the coronavirus effect. KT will give 50 percent rent reductions to tenants in Daegu and North Gyeongsang Province, and up to 3 million won for those in other areas.

Daegu and North Gyeongsang Province have the most confirmed coronavirus patients in Korea. Of the 1,595 confirmed cases on Thursday morning, 1,017 were in Daegu and 321 were in the adjacent North Gyeongsang Province.

Individual landlords are also pitching in to support. Reports of “Good Samaritan” building owners are popping up in capital Seoul, as landlords decide to temporarily lower rents for restaurants and shop-owners. Seoul had 55 confirmed coronavirus cases as of Thursday morning.

“We can only sustain ourselves if our tenants come out of this crisis unscathed,” explained one building owner, who wished to remain anonymous.

Following up on the movement, Finance Minister Hong Nam-ki said Thursday he would push the National Assembly to give these exemplary landlords income and corporate tax exemptions worth 50 percent of the amount they reduce their rent by. State-led institutions will also give up to 35 percent rent cuts for small and medium-sized tenants for the first half of 2020.

Emart24, anticipating more grocery shoppers will turn out to be coronavirus patients, said Thursday that it would immediately order self-quarantine to franchise owners who come into contact with virus carriers, and pay fumigation expenses from the headquarters’ budget.

According to the Korea Centers for Disease Control and Prevention, fumigated shops have to close for two days before reopening.

Emart24 said it would shoulder 100 percent of the franchises’ fresh food waste disposal fees and waive their membership fees for the two days. If small and medium-sized collaborating firms need advance payments for products due to drop in sales amid COVID-19, Emart24 would follow their requests, the company added.

Yanolja, a leisure and entertainment company that has nationwide accommodation facilities as partners, said that it would return advertisement fees from partnering establishments in Daegu, North Gyeongsang Province and Jeju Island for the month of March. The fees are to be returned in Yanolja points, and can be reused for marketing by August.

According to the KBIZ Korea Federation of SMEs on Thursday, a survey conducted earlier this week targeting 300 small and medium-sized enterprises in Korea showed that 70.3 percent of them are having business difficulties due to COVID-19, as compared to the same survey conducted earlier in February that only had 34.4 percent saying so.

Broken down, 72.3 percent of trade-dependent firms and 67.6 percent of service industry firms said they were adversely hit due to the decreased number of foreign visitors and shrunken domestic consumption, as well as difficulties with Chinese contractors.

Among the service industry, 7.6 percent of those surveyed said they were experiencing labor shortages due to employees taking off time from work with suspected cases of coronavirus.

By Lim Jeong-yeo (