SEOUL, KOREA - On the New Year's day, the National Assembly finally passed a law to encourage foreign investment to which the business community welcomed with open arms.

 

Amendments to the so-called Foreign Investment Promotion Act have been pending for months in the legislature, keeping investment projects worth 2.3 trillion won in limbo. The revision was intended to lower the minimum investment share of a foreign partner in a joint investment project to 50 percent from 100 percent.

 

Up until now according to the current Fair Trading Act, if a holding company wants to have a granddaughter company, the daughter company must own 100 percent of the granddaughter as a way to prevent unfettered expansion of conglomerates. The business community, as well as foreign companies, has complained about the regulation that it keeps many joint venture projects and equity investments from happening and demanded that the minimum share be lowered.

 

An official with the Federation of Korean Industries, the trade group representing the interest of large companies, said, "There are many foreign companies waiting with money on hand for this law to be amended."

 

For example, GS Caltex and SK Global Chemical, granddaughter companies of GS Group and SK Group respectively, will soon be able to invest in the paraxylene plants in Ulsan and Yeosu jointly with Japanese partners. The Ulsan plant, to be invested by Japan's Showa Shell and Taiyo Oil as well as GS Caltex, is a 1-trillion-won project. SK Global Chemical's plant in Yeosu, jointly with JX Nippon Oil & Energy Corp., will cost the companies 960 billion won in total.