10 Trillion Won Flows Out Of Country for Study, Other Purposes

As the number of people going abroad for study, language practice, and vacation increases, a staggering 10 trillion won flowed out of the country from January to May.

The capital outflow is expected to grow because the rate of outbound tourists to total population is higher than that of Japan.

The Ministry of Finance and Economy (MOFE) said yesterday that overseas remittances for personal purposes, which include overseas movement expenses and outflow of Korean immigrants` properties, and exclude overseas corporate investment, totaled 8.07 billion dollars, up 15.1 percent from 7.01 billion dollars last year.

The amount of money spent on overseas studying recorded 890 million dollars, showing a 32.9 percent year-on-year increase from 670 million dollars.

Foreign currency outflows incurred by holiday trips totaled 3.48 billion dollars, up 14.5 percent compared to the same period last year.

Remittances for general purposes increased 9.1 percent to 3 billion dollars, and capital transfers incurred by new Korean emigrants and Koreans currently living abroad increased 27.3 percent to 700 million dollars. Such a rapid increase of capital outflow is due to the high proportion of outbound travelers and those who study abroad compared to the size of incomes, according to the MOFE.

Korea’s overseas travel rate (the rate of outbound travelers compared to the total population) is 15 percent, with 7.12 million people out of a total population of 47.34 million going abroad in 2002. Though the rate is lower than that of the U.S. (20.3 percent), it is higher than those of Australia (17.7 percent) and Japan (12.7 percent).

“One of the major reasons behind the recent sluggish domestic consumption figures is overseas spending for studying abroad and overseas travel,” said Minister of Finance and Economy Lee Hun-jai at a policy seminar with MOFE correspondents. “It is not desirable that overseas spending increases when income does not increase.”

Jin-Hup Song jinhup@donga.com