EDITORIAL: Korean retailers under siege

Seoul (The Korea Herald/ANN) - The central government is putting undue pressure on E-mart and other retail giants not to raise prices, while Seoul¿s metropolitan government is taking ill-considered steps to have certain items removed from their shelves. Those actions against the retailers, however, are not legally warranted.

On Thursday, the Ministry of Knowledge Economy summoned executives of E-mart, Homeplus and Lotte Mart for talks on price stability. A ministry spokesman¿s comment on the meeting was mildly worded. He said the ministry "requested them to refrain from raising prices". But the retail chain executives were undoubtedly well aware that a request in Korean bureaucratese is synonymous with a demand or an order.

The ministry¿s coercive action followed anti-inflation remarks by President Park Geun-hye, who recently said that she was determined to stabilise the prices of daily necessities. In a follow-up, relevant government agencies have since been working on price stability.

But the irony is that the central government is waging a war on price increases at a time when prices have already stabilised. The consumer price index has remained below the 2 per cent mark since November. Economic think tanks say they expect the index will hover around the 2 per cent level throughout the year.

Moreover, an effort to stabilise prices by arm-twisting is a tried and failed method, as evidenced by former President Lee Myung-bak¿s price policy. The prices of 52 daily necessities, which had been under control during Lee¿s presidency, gained 25.8 per cent, compared with the consumer price index of 16.5 per cent, in the five-year period.

Even more threatening is Seoul¿s metropolitan government¿s move to ban the sale of 51 items - mostly perishables, marine products and processed foodstuffs - at large discount chains. The metropolitan government is empowered by an ordinance to recommend sales restrictions. Here again, defiance against a recommendation is an invitation to arm-twisting.

The metropolitan government says it will hold a public debate on the restrictions next month and file a petition to the National Assembly to enact a law banning the sale of the items at discount chains. The proposed ban, if written into law, would mean a 15 per cent cut, or a decline of 2.2 trillion won, in the total sales of the chains each year.

The metropolitan government says its action is designed to protect small stores. But the problem is that it ignores the interest of consumers, who would like to purchase all items they need in one place and at lower prices.

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