Lotte Duty Free wins Gangnam licence

Lotte Duty Free, Hyundai Department Store and Shinsegae DF have won licences to run duty-free stores in the Gangnam district in Seoul.

Rivals HD Shilla and SK Networks also bid for licences, issued by the Korea Customs Service (KCS).

Civic groups and lawmakers demanded that the government suspend the licensing decision until an investigation has been completed into allegations that conglomerates made donates to the Mir and Sports foundations in return for favours.

The KCS says it picked a total of six duty-free companies – three conglomerates in Seoul and three SMEs in Busan, Gangwon and Seoul. Among the SMEs, Busan Duty Free won the slot for Busan, Alpensia for Gangwon and Top City for Seoul.

The conglomerates can run their duty-free shops for five years, after spending up to one year preparing for the opening. The SME winners can renew their licence once, giving them a maximum of 10 years.

The KCS says its licence-selection committee of six professors, nine civilian members from think tanks, civic groups and two government officials, gathered for the evaluation in a remote venue in Cheonan three days ahead of the announcement. The contenders were evaluated in 12 categories, the heaviest weights being on financial health, optimum level of investment and business sustainability.

Hyundai Department Store marked the highest score of 801.5 out of the full 1000, followed by Lotte Duty Free with 800.1 and Shinsegae DF with 769.6.

Scandal investigation

The bidding and selection process coincided with lawmakers investigating an influence-peddling scandal in which it is alleged Lotte Group chairman Shin Dong-bin and SK Group chairman Chey Tae-won had asked in secret meetings that the now-impeached national president Park Geun-hye restore their duty-free licences – denied by both companies.

“If the KCS had delayed or cancelled the selection of duty-free licences without legal grounds, the bidders would have suffered economic damage,” the KCS said.

“If any selected company later turns out to have cheated in the selection process, the KCS will immediately cancel its licence.”

Meanwhile, Lotte Duty Free can now reopen a duty-free store at Lotte World Tower in Jamsil, southeastern Seoul. Hyundai Department Store’s duty-free shop will be at its Coex branch in Samseong-dong, and Shinsegae DF’s outlet at Central City in Seocho.

All three sites are connected with mega retail complexes, seemingly in line with the government’s aim to grant extra duty-free licences “to boost domestic demand by aggressively making use of the high demand of Chinese tourists, and to create new jobs,”  reports The Korea Herald.

Relative to duty-free business, Lotte vowed to invest KW2.3 trillion (US$1.9 billion) for the next five years to attract foreign tourists, build tourism infrastructure in Gangnam and support SMEs. Hyundai Department Store is pouring KW30 billion over the next five years into tourism infrastructure in the Coex area while Shinsegae DF has pledged a KW350 billion investment for Gangnam tourism.

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