Foreign Currency Regulations Changed

A person who buys a house overseas and lives in it for more than two years will be allowed to retain the house after returning to Korea, according to an announcement by the Ministry of Finance and Economy yesterday.

The ministry also announced the dropping of the restriction that individuals cannot remit more than $1 million to buy a house overseas, making buying overseas real estate for residential purposes effectively free.

Starting next year, individuals will be allowed to purchase overseas real estate in stages for investment purposes.

The Ministry of Finance and Economy said it will implement the modified restrictions on foreign currency transactions starting today to deregulate foreign currency transactions.

With the new restrictions, one does not have to sell a house purchased overseas and lived in for more than two years, within three years after returning to Korea. The limit on overseas real estate that one can purchase will also be increased from $500,000 to $1 million in early January.

The new rules also allow individuals or individual enterprises to freely conduct their business overseas by scrapping foreign direct investment limits ($10 million per person). Individuals’ foreign direct investment expanded from $280 million in 2002 to $890 million last year.

In an effort to prevent continuous won appreciation, the ministry also revised upward the standard amount of export drafts that companies must collect within 18 months, from $100,000 to $500,000 per export deal.

Do-Young Kim nirvana1@donga.com