South Korea firms spend less at bars, restaurants, golf clubs after anti-graft law

People walk through the Dongseongno shopping district in Daegu, South Korea, on Nov 12, 2016.
People walk through the Dongseongno shopping district in Daegu, South Korea, on Nov 12, 2016. PHOTO: BLOOMBERG

SEOUL (REUTERS) - South Korean firms' spending on building business relationships at bars and restaurants dropped by the most on record in October, following the introduction of an anti-graft law, credit card transaction data released on Friday (Nov 25) showed.

Corruption has become a hot issue in South Korea in recent weeks, with opposition parties drumming up support to launch impeachment proceedings against President Park Geun Hye over an influence peddling scandal involving a close friend.

The legislation introduced by Ms Park's government in late September aims to deter firms from using entertainment budgets to wine and dine public officials and business partners who might grant illicit favours.

The law also made it illegal for civil servants, teachers and journalists to accept meals worth more than 30,000 won (S$36.50) or receive gifts valued above 50,000 won.

Data released by the Credit Finance Association showed entertainment billings dropped 15.1 per cent in October from a year earlier to 85.3 billion won, while spending on golf courses declined 7.9 percent.

The drop in entertainment spending is the biggest since the agency started compiling relevant data from corporate credit cards since 2012, an official said.

Policymakers have raised concerns that the new law may negatively affect retailers and restaurants, and hamper the economy by weakening consumption.

Other data released by the association showed, however, that transactions from individual credit cards rose 8.5 per cent in October from a year earlier, while the overall corporate card spending jumped 26.5 per cent.