Gov¡¯t to revive stock investment savings accounts for workers

As part of its efforts to reinvigorate the sagging stock market, the government has decided to introduce stock savings investment accounts for laborers. The program was experimented with twice, in 1992 and 1996, but the government has decided to revive it out of a sense of crisis, judging that the bearish stock market is casting dark clouds over the entire Korean economy as well as financial markets.

Finance and Economy Minister Jin Nyum said that the government came up with the measure as the financial crunch of companies is growing more aggravated and consumer sentiment is sharply worsening due to the stock market doldrums. The ceiling for an account of the program also increased to 30 million won per person from the 20 million won stipulated in 1992 and 1996.

However, many people are raising objections to the introduction of stock savings accounts for laborers, criticizing the government¡¯s decision to offer tax incentives to boost the stock market. The securities industry had persistently asked the government to revive the program but the latter was reluctant to do so due to problems such as equity with other savings products and the decline of tax revenues. However, the government changed its position despite possible controversy to boost the stock market as economic conditions both inside and outside the country are deteriorating due to the aftereffects of restructuring in the domestic corporate and financial sectors and plunging overseas stock markets.

Officials believe that they can somehow ease a dispute over equity because there are currently tax-free funds for bonds with ceilings set at 20 million won per person. As in 1996, investment trusts or brokerages will deal with the stock-based savings accounts.