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Bill aims to compensate SMEs for losses from virus restrictions, starting in July

A street in Myeong-dong, a popular tourist district in Seoul, is nearly empty. (Yonhap)
A street in Myeong-dong, a popular tourist district in Seoul, is nearly empty. (Yonhap)
Small businesses and microenterprises that have suffered due to COVID-19 and the accompanying restrictions could be eligible for government subsidies as early as July, as the legislative process is underway.

According to officials with the ruling Democratic Party of Korea and the government on Sunday, their representatives were currently fine-tuning the legal framework to offer compensation to microenterprises that had been ordered to close or scale back their operations as part of the national social distancing rules.

To prevent the spread of the new coronavirus, the South Korean government has imposed strict social distancing measures. Private gatherings of more than five people were banned, and high-risk businesses such as restaurants, cafes and gyms were ordered to close or reduce their operating hours.

A bill to revise the Act on the Protection of and Support for Micro Enterprises, initiated by Democratic Party Rep. Song Gap-seok, is currently pending at the National Assembly. If successful, it would systemize the compensation process in law.

While the bill excludes businesses that were not affected the government restrictions, there is still room for discussion on who should be eligible for compensation and how much they should receive. It was left to the deliberation committee to decide those details.

There are also concerns that the relief program will increase the burden on the country’s fiscal soundness.

Yet the ruling camp is pushing to pass the bill through the parliament in March so that struggling small businesses can receive subsidies in July at the earliest. If Rep. Song’s bill becomes law, it will take effect three months after it is proclaimed to the public.

Businesses that are found to have violated the COVID-19 restrictions or neglected their disinfection duties, however, would be excluded from compensation and could be fined as much as 3 million won ($2,667).

In a meeting with the Korea Federation of Micro Enterprise on Friday, SMEs and Startups Minister Kwon Chil-seung vowed to come up with measures to support small-business owners.

“I appreciate the efforts and sacrifices made by the small enterprises as they follow the government’s social distancing measures,” Kwon said.

“I feel the need to legalize the compensation processes for microenterprises and to offer the fourth (round of) COVID-19 relief funds to more people.”

Amid the ongoing pandemic and social distancing, hundreds of small enterprises, including cafes and restaurants, have filed legal action against the government seeking compensation.

By Jo He-rim (