New and Upcoming Price Hikes?

by Korea4Expats Team, 02/08/2010

Consumers all across Korea will see an increase in their utility bills in August. On Friday 30 July, the government approved an increase in both electricity and gas rates – an average of 3.5% and 4.9% respectively. The electricity rate hike took effect right away, on Sunday August 1st, but the natural gas will stay the same until September 1st. Water rates will apparently stay the same.

The cost of travelling by bus between Korean cities is also going up; intercity bus fares have been increased by 4.3% while express bus trips will cost an additional 5.3%. On the good news front, rail fares, toll charges and postal rates will remain at their current level.

Car owners will be seeing their auto insurance premiums go up at least 3% (between 3% and 8%) starting September. Insurance firms argue that the hike is necessary as a result of recent changes in the official guideline covering auto repair costs. In June, the Ministry of Land, Transport and Maritime Affairs raised the recommended payment range for mechanics to between 21,553 and 24,252 won per hour. Though not binding, the guideline serves as an industry-wide basis for contracts between mechanics and insurers.

Of particular interest to foreign residents who are considering opening a small business in Korea, the minimum amount of capital one must bring into the country to obtain an investment D-8 visa is set to double on 6 October. The current amount required is the equivalent of 50 million won in a foreign currency. As of October this year (exact date unknown) the amount required will be upped to 100 million won equivalent in a foreign currency. This increase is one of the amendments that will be included in the revision of the Foreign Investment Promotion Act that will go into effect at some point in October.

For those wondering why the government would double the minimum foreign investment it requires at a time when foreign direct investment in Korea has been decreasing, media reports quotes a government official as saying, ““The move is part of an effort to limit the growing number of illegal entries by foreigners into Korea under false premises,” said a ministry official, who noted that it is very easy to acquire an investment visa. This has led to an increasing number of foreigners, especially from Southeast Asia, abusing the visa status. “The amendment is also a response to requests we have received from the Ministry of Justice,” the official said.
“The impact of the measure will be very small in terms of affecting the amount of foreign direct investment in Korea” because it deals mainly with small business investments.

Flying out of Korean is also going to be more expensive. Korean Air is hiking its fares in August up to 10%. Flights bound for the United States and Canada are going up 5% while travelers bound for many European countries as well as Australia and new Zealand are about to pay 5 to 10% more in August than in July. Asiana has just announced that it will be following Korean Air’s lead.

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