Big push for South Korean tourism

One measure calls for refunding foreign tourists the 10 per cent VAT on their hotel bills. Domestic hotels have long called for the VAT reimbursement, which would have the effect of giving tourists a big discount on their hotel charges. But the tax office has persistently opposed the idea, as it would reduce tax revenue. The government, however, has decided to give it a try, as the gains in tourism revenue are expected to more than offset the drop in tax income. VAT refunds will be implemented for one year from next January. The government said it would assess the outcome before deciding whether to extend it or not.

Other measures include issuing more multiple visas to tourists from China and Southeast Asia; creating a tourist police force to crack down on overcharging taxis and shops fleecing tourists; and hiring more tour guides capable of speaking foreign languages. These steps are expected to help make South Korea a more pleasant place to visit.

Another major initiative proposes to allow domestic cruise lines to operate onboard casinos for foreign passengers. This has long been the dream of many Korean tourism entrepreneurs. But their dreams have been dashed by the government’s strict ban on casinos aboard cruise vessels. For many cruise lines around the world, casinos are essential to their survival, as 20 to 50 per cent of their income comes from the gambling business. But the South Korean government had refused to lift the ban until the nation’s first cruise line went bankrupt due to financial trouble.

Harmony Cruise, launched in January 2012 to offer tours from Busan to Japanese cities, went belly up in December, as it could not make enough money without a casino on its ship, the Club Harmony. Now, the government needs to go beyond allowing foreigners-only casinos on cruise vessels to promoting land-based casino resorts to attract foreign tourists. In recent years, casino fever has hit many countries in the region, including Japan. Inspired by Singapore’s shining success story, they are promoting large-scale casino-resort complexes.

Gyeonggi province has been pushing for two integrated casino resorts for foreigners near Incheon International Airport. Yet the Ministry of Culture, Sports and Tourism recently rejected investment proposals from the provincial government’s foreign partners, saying they doubted their abilities to fund the plans. The central government needs to find ways to help the province pull off its project.

Meanwhile, the tourism package also proposes to build medical tourism clusters in 10 areas of the country. It calls for combining South Korea’s high-quality, low-cost medical services with local tourism resources.

The idea is beyond reproach. Yet many of the selected areas are in need of more large-scale hospitals to develop into medical tourism clusters. To build such hospitals, it is necessary to mobilise private capital.

Yet the law on medical services bans private investors from building and operating hospitals. It’s time to remove this outdated entry barrier.