The Korea Customs Service said on Thursday that it has put out a public notice on the policy changes aimed at favoring small enterprises over conglomerates in running duty-free shops for foreign tourists.

Under the revised rules, the KCS will allow only small and medium enterprises and provincial public companies to compete for future licenses to open duty-free shops in cities that serve only foreign nationals.

The move comes as the government takes steps to protect smaller firms and balance the market long dominated by the powerful chaebol groups.

Korea currently has 28 duty-free stores, 16 of which are run by family-controlled conglomerates. In terms of market share, the shopping outlets operated by big companies accounted for 85 percent of all sales.

The customs office plans to issue permits to open 10 new shops in provincial cities dedicated to foreign tourists. The new policy, however, will not apply to duty-free shops at international airports.

The KCS said it will favor small firms planning to set up shops in provincial areas in line with the government’s policy focus on balanced development and the promotion of regional tourism industries.

In addition to the policy incentives for small firms over conglomerates, new duty-free shops will be required to increase the proportion of store space selling Korean goods. Currently, 20 percent or 330 square meters of floor space at a duty-free shop must be set aside to sell local products. The KCS said it will expand the percentage to 40 percent or 825 square meters.

Existing shops will be given a grace period so that they can steadily increase the floor space for Korean products to meet the requirement.

The Korean government is putting more pressure on conglomerates to pull away from certain sectors that small business owners have long favored, while introducing a series of policy initiatives designed to help small enterprises expand their businesses.

By Yang Sung-jin (insight@heraldcorp.com)