South Korea unveiled a set of measures, including expanded tax benefits, to stimulate business activity in the service sector Thursday, as it believes the area will likely help create more jobs and lead to overall economic growth.
The service-sector development measures were the first of their kind mapped out by the Park Geun-hye government since it took office in February. They were announced jointly by the Ministry of Strategy and Finance; the Ministry of Culture, Sports and Tourism; and the Ministry of Science, ICT and Future Planning.
Under the latest measures, the government plans to expand tax benefits to businesses in leisure and health sectors, among other things. They include tax deductions for corporate investment linked to job creation.
In a bid to provide expanded tax benefits, the government also seeks to adjust the small-business classification standards in the service sector in line with what is being applied to manufacturing companies.
Small businesses in manufacturing refer to those with less than 300 employees or capital estimated at 8 billion won or smaller. The service sector does not have such a uniform classification standard for small businesses, which are eligible for more government support.
The government said that it will introduce the "same or similar" classification standards in the service sector as those applied to the manufacturers so that it can enjoy more tax and financial support going forward.
The government will also intensify its efforts to stimulate the country's contents sector, which is regarded as a major block of the high potential service industry.
In a related move, the contents fund established to provide financial support for the sector will be expanded from 920 billion won (US$804.9 million) this year to 1.82 trillion won by the end of 2017.
Through the efforts, the government expected that the contents sector could grow to a 120 trillion won market, export $10 billion worth of products and create 690,000 jobs by the end of 2017.
"Our service sector has been growing steadily in its size, but its productivity still remains low compared with its counterparts in the Organization for Economic Cooperation and Development, and even the manufacturing sector here," Finance Minister Hyun Oh-seok said.
"The efforts to stimulate the service sector should not be a one-off event but something that we should push for consistently and on a step-by-step basis with mid- and long-term timetables in mind," he added. "Measures to enhance the competitiveness of high value added and promising service sectors will be unveiled progressively."
Hyun said that the government is preparing the second batch of measures aimed at stimulating the domestic service sector and the timetable on when to announce it will be determined based on discussions and cooperation among stakeholders and related agencies. (Yonhap News)
