hankyoreh

South Korea plans to remove discriminatory rules that have made it hard for local companies and funds to invest abroad, the nation's top economic policymaker said Tuesday.

Finance Minister Kwon O-kyu told reporters Seoul's goal is to change the rules so companies and investors are not at a disadvantage when they make portfolio investments or build production facilities overseas.

The remarks come as the government said it will release new guidelines on foreign investment regulation reforms this month.

"The government is aware of complaints by the business community and prospective investors about existing limitations that effectively tie their hands," Kwon said.

He said changes could include tax regulations, which have been cited as hurting profit levels, and administrative red tape.

Kwon, who doubles as deputy prime minister, said the government may consider helping companies build up foreign operations in certain business sectors, which could lead to future profits.

These may include business areas where South Korean companies hold an edge over competitors.

He said the expansion of the country's economy and investment patterns are starting to mirror those in advanced economies.

South Korea previously encouraged companies to invest within the country to create jobs, increase production and exports and boost domestic economic growth. Its tax codes and other business rules supported this policy at the expense of those who wanted to invest in foreign markets.

Keeping investment in-house, however, has resulted in the appreciation of the Korean won and more foreign direct investment into the country than going out. The excess funds have also been cited as contributing to a recent surge in housing prices.

Market sources said the exact amount of money available for foreign investment has not been tallied but could be very large.

South Korea's trade surplus has exceeded US$10 billion every year since 2002, which is putting pressure on the won. A higher won can hurt the competitiveness of locally made products abroad and is bad news for a country that relies on trade for growth.

Kwon also said consistency in government policy is the key to taming the surge in housing prices.

"If will adhere to the principle of gradually increasing supply there is every reason to believe that prices will stabilize down the road," he said. Kwon said about 300,000 new homes are planned for this year, and 320,000 for 2008.

He said the government's goal is not to push for a steep drop in prices but to calm and gradually move them downward.

Kwon also said Seoul is pushing to complete a draft bill on promoting paperless, electronic securities transactions by the first half of this year.

A government proposal is planned to be sent to the National Assembly for approval by year's end. If it passes, South Korea may be able to start electronic securities transactions in 2009 at the earliest, he said.

The Finance Ministry said such a change will help facilitate securities transactions, which can be beneficial to the overall financial market. It added that 37 countries have already adopted the paperless system and 22 of the 30 Organization for Economic Cooperation and Development members have made the switch.

Japan plans to adopt this method of transaction in 2009, and the United States has been a partial user of this system.
Seoul, Jan. 2 (Yonhap News)