[THE INVESTOR] The new anticorruption act set to take effect in September will cost local businesses 11.6 trillion won (US$9.96 billion) on an annual basis, a think tank claimed.

Commonly known as the Kim Young-ran act, it will place a ceiling on the value of gifts -- cash and goods -- and meals individuals in selected professions can have in their professional capacities. The government announced its enforcement in May. 

According to a report compiled by the Korea Economic Research Institute, if the act is enforced without amendments, local businesses will face huge losses.

The think tank predicted that restaurants and related businesses will be the hardest hit with the act cutting annual sales by 8.5 trillion won.

The KERI report also said that the retail industry will see sales cut by 2 trillion won due to the ceiling on the price of gifts, and golf courses will see a drop of 1.1 trillion won.

According to KERI’s calculations, a 30,000-won ceiling on the price of a meal those affected by the act can have will result in the loss of 8.5 trillion won, but that the figure will drop to 4.7 trillion won should the ceiling be raised to 50,000 won.

A ceiling of 70,000 won will bring a loss of 1.5 trillion won, and 660 billion won if the ceiling is placed at 100,000 won, KERI said.

The think tank, however, said that the impact of the act would be larger in practice.

It said that the figures do not reflect indirect damages caused by the fall in spending caused by the act.

By Choi He-suk (cheesuk@heraldcorp.com)