Impact of ARFP on Korea’s financial services

First published in The Korea Herald. A very important development in the first week of June that will bring huge benefits to the financial services industry in Korea has gone largely unnoticed here. Finance officials and regulators from six Asia Pacific Economic Cooperation members, including Korea, who are leading the development of the Asia Region Fund Passport concluded a week of meetings in Singapore to iron out the details of the proposal and announced that it was on track to be launched in 2016. The countries ― also including Australia, New Zealand, the Philippines, Singapore and Thailand ― aim to cut down on incompatible or overlapping financial regulations that may hinder the marketing of managed funds between participating economies. Six other APEC members ― Hong Kong, Indonesia,...

Read more »

Stock price limits and circuit breakers

First Published in The Korea Herald. Starting next month, the Korea Exchange will expand price limits and introduce market-wide circuit breakers that should provide some relief for stock traders and retail investors. Price limits and circuit breakers are used by many stock exchanges and regulators to counter severe price movements in financial markets, and Korea is no exception. Price limits are maximum percentages or values that a security or derivative contract can rise or fall in a trading day. Circuit breakers are trading halts triggered by sharp price movements, and can be imposed on either an individual financial instrument or the market as a whole. They were first adopted by the New York Stock Exchange and other U.S. exchanges in 1988.Circuit breakers had been recommended...

Read more »

Inadequate steps to boost foreign investment in Korea

First published in The Korea Herald. Last week, the Korean government announced plans to attract more foreign direct investment by more than 50 percent in three years by easing regulations and focusing support on five sectors, including cosmetics and pharmaceuticals. The Ministry of Trade, Industry and Energy said in a statement that industrial materials, petroleum products and food processing sectors would also be given strong support through regulatory changes. Korea received FDI pledges totaling $19 billion last year, up sharply from $14.5 billion in 2013, and now aims to increase the amount to $30 billion in 2017. Despite the sharp rise in pledges last year, South Korea still ranks low among high-income countries in the accumulated amount of FDI compared to the size of its economy. Moreover,...

Read more »

Korean workers’ tax burden not as bad as it seems

First published in The Korea Herald. Going by the recent debates on tax hikes in Korea and President Park Geun-hye’s firm resolve not to place “an additional burden on the public,” it would appear that the Koreans are being taxed heavily.Although it is true that economic growth is stagnant, and employment rates are not too rosy, a new report by the Organization of Economic Cooperation and Development has just shattered the myth that the tax burden in Korea is unusually high. The OECD report, Taxing Wages 2015, released on April 14, says the tax burden has increased in 23 member countries and fallen in 10 over the past five years. And guess which group Korea falls into?That’s right, from 2010 to 2014, the tax burden in Korea has declined, even as the middle class in most other developed...

Read more »