Many small business owners in South Korea identify themselves in the cash-strapped characters of the wildly popular Netflix drama ‘Squid Game’, who uncover a debt trap for a chance to win $38 million (about Rs 285 crore). are looking forward to. All very familiar.
Nearing retirement at the age of 58, Yoo Hee-sook pays off his debts long ago, but still receives calls from collection agencies threatening to confiscate his bank accounts, as the loans go without his knowledge. were secured and sold to investors.
“In Korea, once you become a credit delinquent, it’s like the end of the world,” said Yu, who spent 13 years paying off his debt for small jobs like writing for film magazines. Was about to pay. A film that flopped in 2002.
Like the 456 game show contestants of “Squid Game,” Yu said, “I only wanted opportunities to pay off debt, but banks don’t let you make money.”
While foreigners can associate South Korea with boybands bts and smooth samsung Smartphones, the drama points to a dark aspect of rising personal borrowing, the highest suicide rate among advanced nations and the rarity of getting out of debt.
Record home lending is fueling private investment and housing development, but forgiving social customs about loans often blur the line between personal and business loans, placing a burden on those running small businesses.
Personal bankruptcy hit a five-year high of 50,379 last year, court filings show.
Data from Korea Credit Information Services shows that the proportion of those who lag behind more than one type of personal loan payment reached 55.47 percent as of June, up from 48 percent in 2017.
“if Donald Trump Was a Korean, he probably couldn’t be president, went bankrupt multiple times,” said a lawyer in Seoul who specializes in personal bankruptcy.
“In the United States, corporate debt is more different from personal loans.”
An inadequate social safety net for small entrepreneurs and the lack of a rehabilitation program for failures may leave some South Koreans desperate, and banks often ignore the five-year limit for destroying bankruptcy records.
“Due to traditional practices in the banking industry, business owners in South Korea face a high likelihood of incurring debt from the business they run,” said bankruptcy judge Ahn Byung-wook.
Banks often demand that business owners stand as joint surety for the firm’s lending, a practice the government banned in 2018 for public financial institutions, though three owners told Reuters that some remained providers. live.
Applicants for business loans who have a poor credit rating or a history of default require a guarantee from state-run financial institutions in South Korea.
“Culturally, unsuccessful entrepreneurs are socially stigmatized, so it’s hard to get started, because people don’t trust them,” said Ahn, who spent four years in Seoul bankruptcy court.
“On top of that, those who file personal bankruptcy face a long list of restrictions on employment.”
South Korea’s self-employed ranks among the highest in the world, accounting for a quarter of the job market, making it vulnerable to recession. A central bank study in 2017 showed that only 38% of such businesses survive for three years.
Yet, as economic prospects dwindle, South Koreans are chasing less good jobs amid rising home prices, many betting that speculation is the only route to wealth, and stocks And have taken more debt than ever before to buy other properties.
Domestic borrowings stood at a record KRW 1,806 trillion ($1.54 trillion or about Rs 11,501 crore) in the June quarter, equivalent to GDP.
“Government encourages startups, but they don’t take care of failing businesses,” said 40-year-old entrepreneur Ryu Kwang-han, who opted out of the debtor rehabilitation program in 2019 but is still struggling to get loans. Huh.”
“How is it different from ‘squid game‘ If there’s no second chance?”
The global sensation has been watched by 142 million homes since its September 17 debut, the world’s largest streaming service has said. Netflix To add 4.38 million subscribers.
© Thomson Reuters 2021