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(EDITORIAL from Korea Times on Nov. 28)

Editorials from Korean Dailies 07:18 November 28, 2018

Another stopgap measure
Revitalizing economy is best way to help small firms

The government and ruling party decided Monday to cut credit card processing fees for struggling owner-operators of stores, and small businesses.

The credit card commission rate for small businesses with annual revenue from 500 million won ($442,470) to 1 billion won will go down to 1.4 percent per transaction from 2.05 percent. Firms with yearly sales of between 1 billion won and 3 billion won will see their rate cut from 2.21 percent to 1.6 percent.

The Moon Jae-in administration seems to have come up with the measure to support the self-employed and small business owners reeling from the business slump and steep increases in the minimum wage. Economic policymakers' intent is understandable ― only when these microenterprises revive, can employment and workers' incomes grow, eventually leading to economic recovery.

It is less than certain, however, whether the latest step will succeed or not. The support measure is likely to reduce monthly credit card fees for firms with annual revenue of 500 million won to 1 billion won by about 120,000 won on average, and by 420,000 for those with yearly sales of 1 billion won to 3 billion won.

The benefits for small businesses appear to be smaller than expected.

Worse yet, there are voices of concern about its adverse effects. Economists express doubts whether it is desirable for the government to meddle in credit card commission rates. Card fees are the prices of services, which are better left to market forces, critics say.

Government officials refute this saying card fees have a public nature and take the form of an oligopoly, and thus it is inevitable for an administrative intervention to take place. Their contention remains controversial at best, however. All this explains why policymakers should take extra care to minimize the ill effects of the measure.

More fundamentally, the best support for small businesses is to speed up economic recovery. What is most important is to perk up the sluggish economy through a comprehensive industrial promotion policy and bold deregulation. All the more so because it seems set to go further down the drain next year.

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