Korea weighs new measures as TMON, WeMakePrice crisis nears $1 bn in damages

Vice Minister Kim Bum-seok presides over a task force meeting at the Government Complex Seoul on the 23. [Courtesy of Ministry of Economy and Finance]

The South Korean government is expected to take further actions in response to the recent payment delay crisis involving e-commerce platforms TMON Inc. and WeMakePrice Inc., which has left 48,000 businesses with an outstanding amount of 1.3 trillion won ($980 million).

According to the Ministry of Economy and Finance on Sunday, a task force meeting was held on Friday, chaired by First Vice Minister Kim Bum-seok, to address the crisis.

The meeting reviewed the current damages and discussed additional measures. The meeting also considered solutions for unsettled payments affecting companies that do not operate payment gateway (PG) services, such as Interpark Commerce Corp.

As part of the government’s 1.6 trillion won relief package, loan rates will be lowered to ease the burden on businesses affected by the crisis.

In particular, interest rates for emergency management stabilization funds provided by the Korea SMEs and Startups Agency and the Small Enterprise and Market Service will be reduced from 3.51 percent and 3.4 percent to 2.5 percent.

The government also plans to implement regulatory improvements across the e-commerce industry by amending relevant laws.

This will include strengthening settlement deadlines for e-commerce companies and tightening registration requirements for PG companies.

The Korea Fair Trade Commission will lead efforts to quickly assess the damages and determine future actions based on the findings.

The government will also reduce special guarantee loan interest rates offered by the Korea Credit Guarantee Fund and the Industrial Bank of Korea to 3.3-4.4 percent from the current range of 3.9-4.5 percent.

Guarantee fees will also be lowered, with a single fee of 0.5 percent now applying to all amounts, replacing the previous tiered structure.