A seafood restaurant based in Jongno, Seou recently adjusted the price of its two most popular dishes from 32,000 won ($29) to 28,000 won per person.

It was a preemptive measure to assure that government officials at the Seoul Government Complex, located just around the corner, would continue visiting the eatery after the Improper Solicitation and Graft Act kicks in next month.

Often referred to as the Kim Young-ran law, named after former Anti-Corruption and Civil Rights Commission chief Kim Young-ran who proposed it in 2011, the act puts the threshold for money spent on meals at 30,000 won per person, gifts at 50,000 won and money given for ceremonial occasions limited to 100,000 won.

It is intended to curb unlawful solicitation and bribery by public officials, journalists and private school faculty, but has sparked concerns it will have a detrimental impact on overall consumption across the country. 

“I don’t think there has been a notable impact on sales yet, but we are worried that public officials will be afraid to come after the law takes effect in September,” said a worker at a restaurant near the Defense Ministry in Yongsan-gu, Seoul.

Military officials and civilian workers in the military are both constituted as public officials by Korean law, and thereby fall under the influence of the antigraft law.

It is customary in Korea to treat business partners to meals or hand out gifts in ceremonial occasions as a token of appreciation or good intent. It is also conventional for public officials to send out gifts during holidays, such as the upcoming Chuseok holidays next month.

But there have been consistent concerns that such customs are being used as an excuse for de facto bribery and ultimately a network of corruption across civil and public sectors.

The Constitutional Court’s ruling last month turned down challenges against the disputed act and has cleared the way for it to take effect on Sept. 28.

Upon the court’s ruling, protests from the agricultural and marine sectors have further escalated.

The Ministry of Agriculture and Forestry, Ministry of Oceans and Fisheries and Small and Medium Business Administration filed for a suspension of the implementation along with adjustment of the spending limits to the Ministry of Government Legislation.

The legislative body turned down the request for a delay, and requested arbitration on the spending limits to the Office for Government Policy Coordination.

On Monday, the National Assembly’s Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee unanimously adopted a resolution calling for exclusion of agricultural and marine products from being affected by the law citing concerns of drastic cut in demand. The committee said it will deliver the resolution to the State Affairs Committee in charge of the antigraft law.

According to the Agriculture, Food and Rural Affairs Ministry, about 93 percent of domestically grown beef gift sets are priced over 100,000 won. Some at the ministry estimate the law would cause demand for beef sets to slide to the tune of some 240 billion won.

“The law will threaten our survival,” said Kim Young-won, in charge of public relations affairs at the Hanwoo Association. “It might be possible to lower prices of fruit gift sets by reducing the weight of the gifts. It is impossible to do so (for beef gift sets) because they would make the gifts too small to express gratitude.”

A manager of beef restaurant Samwon Garden’s Daechi-dong branch, located in the affluent neighborhood in southern Seoul, agreed, “Yes, we are much concerned about the impact on our sales starting next month.”

The decades-old eatery offers 200 grams of marinated Korean sliced beef bulgogi for 37,000 won. The fresh short ribs are sold at 79,000 won for 150 grams.

According to Statistics Korea, the average expenditure on dining out per person is about 43,900 won on a meal of Korean food, 29,300 won on Western food, 69,000 won on Japanese and 33,000 won on Chinese.

With the introduction of the bill, some restaurants are even cooking up their own “Kim Young-ran menu” designed to not exceed the limit.

Seafood cuisine chain Haeuri is slated to launch a 29,000 won dinner set on the day the act kicks off.

“The most affordable dinner course was 36,000 won, our chain plans to bring down the price below 30,000 won in order to prevent falls in sales,” said a manager at a Haeuri branch near Namdaemun in central Seoul.

Regardless of the last-ditch efforts, some pundits have forecast the anticorruption law to have a significant impact on the Korean economy.

According to a June report by the Korea Economic Research Institute, the collective loss in annual sales is expected to be around 11.6 trillion won. In terms of each industry, restaurants are expected to earn 8.5 trillion less, gift-related industries will see their profit fall by 1.97 trillion won and country clubs, primarily for golf, will make 1.1 trillion won less.

The country’s Chuseok holidays from Sept. 14-16, where robust exchanging of gifts, usually takes place, are expected to be demonstrate on some level just how much of an impact the Kim Young-ran law has.

An official from Lotte Department Store said that while it is preparing a cheaper sets of gift, it will be nearly impossible to make affordable choices for beef and other meats, which have been popular choices for holiday gifts.

But some government officials supported the act, saying it will serve as an opportunity to uproot what is sometimes seen as an “excessive” act of hospitality to business partners.

“There are not many people who would spend 30,000 won per person at a family dinner. Such (expensive) meals are only to show the other person that he or she would care enough to spend so much money on a meal,” a government official said.

Both proponents and opponents of the law agree the act is somewhat vague and delegates the details and exceptions to the ordinance.

A section of the act also defines gifts that are allowed by “social norms” as not punishable by law, without clarifying what social norms entail.

“I think there are some ambiguous points as of now, which is why we need to work on specifying it in the manual. We expect trial and error in the earlier stages (of implementing the law),” said an ACRC official.

He said the commission is also planning to hold briefing sessions for the Kim Young-ran law for foreign press within this year, as foreign workers in Korea would also be subject to the act.

By Song Su-hyun and Yoon Min-sik
(song@heraldcorp.com)(minsikyoon@heraldcorp.com">song@heraldcorp.com)
(minsikyoon@heraldcorp.com)