Posted February. 25, 2005 22:33,
The Korea Investment Corporation (KIC) will be created in the first half of this year to oversee the investment of $20 billion in overseas stocks and bonds. That figure converts into roughly a tenth of the $200 billion foreign exchange reserve held by the government.
But pension funds are unlikely to be injected into the corporations investment resources until January 1, 2007, after which an evaluation of business performance will determine whether such an infusion was merited.
The National Assemblys Finance and Economy Committee held a plenary session on Friday, passing a draft amendment of the Korea Investment Corporation Act by a vote of eleven to seven. The bill had been at the center of much bickering between the opposing sides of the aisle.
Members of the ruling Uri party, as well as Shin Kuk-hwan, an independent representative, supported the revision. The opposition Grand National Party and Shim Sang-Jung of the Democratic Labor Party were the naysayers.
According to the amendment, the KIC would be established based on an initial government investment of one trillion won. The corporation will be sanctioned to invest a total of $20 billion in overseas assets, including $17 billion in foreign exchange held by the Bank of Korea and $3 billion in exchange equalization funds.
The KIC will be authorized to invest solely in overseas foreign exchange assets. Investment in the domestic scope will be confined to the secure purchase of national and public bonds, and the placing of deposits in financial organizations. Investing in domestic shares or immovable property will be strictly off-limits.
The initial push by the government and the ruling party to mobilize the pension funds in the investment enterprise has been stymied by the opposition parties until the end of 2006.