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Korean govt revises Foreign Investment Promotion Act
Jan '14
The National Assembly of South Korea has passed a long pending bill for revision of the Foreign Investment Promotion Act, which would enable subsidiaries of big companies to set up joint ventures with foreign capital.
As per the revised Act, the shareholding limit of a subsidiary company in a sub-subsidiary company has been decreased to 50 percent from the earlier 100 percent.
This is expected to allow up to 50 percent of the investment by foreign companies in new joint ventures of subsidiary companies, and further facilitate large-scale corporate investment in the country.
The passage of the revised Act will immediately allow SK Global Chemical and GS Caltex to speed up their paraxylene (PX) projects that involve joint venture with foreign firms.
SK Global Chemical signed a memorandum of understanding with Japan-based JX Nippon Oil & Energy in 2011 for constructing a 1 trillion won chemical plant in Ulsan. Similarly, GS Caltex reached an agreement with Japanese oil refiner Showa Shell Sekiyu in 2012 for setting up a 1 trillion won joint venture project in Yeosu, South Jeolla province.
Now, that the revised Act has been passed, these two projects are expected to be completed at a fast pace. Moreover, the revised Act is likely to encourage other subsidiaries of conglomerates to enter into joint ventures with foreign companies.
The South Korean Government is expecting that the revised law would attract more than 2 trillion won investment per annum and result in creation of about 14,000 new employment opportunities.

Fibre2fashion News Desk - India

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