(SEOUL = Newsis) The National Assembly of Korea approved the revised Foreign Investment Promotion Act after a tough tug-of-war during the budget review for the fiscal year of 2014. The revised bill was passed by a vote of 168 in favor, 66 against and 20 abstained.

Korean President Park Geun-hye urged that the bill be addressed in a speech last November, saying that “the promotion act will attract KRW 2.3 trillion in investments and generate about 14,000 employment opportunities.” As a result, the government and ruling Saenuri Party made the passing of the promotion act a priority, to vitalize the economy.

However, the main opposition Democratic Party argued that the government’s intention was to provide excessive privileges to conglomerates such as SK and GS Group. The party also said that the job creation effect was overstated and that revising the Monopoly Regulation and Fair Trade Act was the appropriate way to attract foreign investment.

The stalled negotiations over the promotion act and the National Intelligence Service Act finally reached an agreement after the two parties agreed to discuss reforming the public prosecutors’ office, which includes introducing the standing special prosecution and special inspection provision, in the National Assembly session in February.

The revised promotion act aims to reinforce the preclearance requirements of investments by subsidiary companies.

The act allows a subsidiary of the conglomerate to establish a joint venture with foreign investors if the company owns more than 50 percent of the shares of a joint venture and the individual foreign investment owns more than 30 percent.

If a subsidiary of a holding company owns the shares of a joint venture, it is required to go through a deliberation process and meet the requirements of the Korea Fair Trade Commission of the Republic of Korea. The requirements are established by the minister of Trade, Industry & Energy as prescribed by presidential decree. After it fulfills the requirements, the company also needs to receive approval from the Foreign Investment Committee.

lgh@newsis.com

Source Text

Source: Newsis (Jan. 1, 2014)

** This article was translated from the Korean.