Duty-free operators to get licenses for a decade

Retail giants like Lotte and Shinsegae don’t have to worry about getting their duty-free licenses renewed every five years anymore.

A task force on improving duty-free regulations decided on Wednesday to propose the government extend duty-free licenses for conglomerates to a maximum 10 years. Additionally, duty-free stores managed by small and medium-sized companies will be allowed to have their licenses renewed two times.

Under the current law, conglomerate have to bid for duty-free licenses from scratch every five years. Small and medium-sized duty-free operators are allowed to renew their licenses once.

If the government and lawmakers accept the proposal, it will undo the regulation changes made by the previous Park Geun-hye administration in November 2013, which cut the contract terms from 10 years to five.

According to Yoo Chang-jo, a business professor at Dongguk University who is leading the task force, the goal is to make the changes effective from Jan. 1.

“Currently, those with duty-free licenses have until next year or three years from today before their licenses expire,” Yoo said on Wednesday. If the revised regulation passes the National Assembly, “they will be allowed to renew their licenses once” for another five years.

There have been complaints in the industry that extending licenses to a maximum 10 years is still too short and harms the duty-free operators’ competitiveness by limiting investment and contributing to uncertainty.

The task force claimed that it limited the maximum to 10 years for a reason.

“If the license is renewed after 15 or 20 years, there will be criticism that [the government] is favoring existing operators, which will not be accepted by the public,” Yoo said.

He said the possibility is high for duty-free operators that are competitive to be picked again.

The task force was formed last July after the Board of Audit and Inspection of Korea came to the conclusion that license reviews by the Park government lacked transparency and fairness.

Park was accused of influencing the government to strip the duty-free license held by Lotte Group in 2015.

Lotte regained its license in a revaluation the following year after allegedly complying to several demands from the Blue House.