Vendors and customers of TMON and WeMakePrice stage a rally in front of Financial Services Commission in Jongno District, Seoul, Aug. 18. Yonhap

The government said Wednesday it will provide 1.6 trillion won ($1.2 billion) in financial support, including loans, to help vendors hit by delayed payments of e-commerce platforms TMON and WeMakePrice.

The announcement came after the two firms, owned by Singapore-based Qoo10, filed for corporate rehabilitation last month after failing to make payments to vendors and provide refunds to customers amid liquidity issues caused by their owners' aggressive merger deals.

The proposed budget, which marks a rise from 1.2 trillion won proposed earlier this month, will be utilized for various forms of financial support for the affected vendors, including loans and interest subsidies.

The finance ministry added the increase was primarily due to 16 regional governments deciding to expand their support by 360 billion won through the emergency management stabilization fund for the affected vendors.

"We will also consider measures to ease the financial burden on affected small merchants and small-to-midsized businesses by lowering interest rates," Finance Minister Choi Sang-mok said during a meeting with economy-related ministers.

"All ministries and regional governments will work together to prevent the spread of damage resulting from the crisis at TMON and WeMakePrice," he added.

As of Monday, the government said the combined amount of unpaid bills to vendors by the two platforms came to 818.8 billion won.

The amount of bills settled since the outbreak of the crisis totaled 35.9 billion won as of Tuesday last week, it added.

To address the damage to consumers in areas such as travel packages, accommodation reservations and gift vouchers, the government added that it will promptly pursue collective dispute mediation.

The government also vowed to introduce measures to legislate the settlement period for e-commerce platforms with their vendors within this month, while making it mandatory for operators to manage funds needed for payments separately.

Meanwhile, the National Tax Service expedited value-added tax refunds totaling an estimated 61.1 billion won and offered additional relief measures, such as deferring payments and postponing tax audits for the affected vendors. (Yonhap)