Geert Bekaert and Campbell R. Harvey's


Chronology of Economic, Political and Financial Events in Emerging Markets




Major Political and Economic Events




Controlled Effective Rate was linked to a "basket" of unspecified currencies.a


Liberalization of foreign-investment rules.a


Abolished credit ceilings and reduced scope of direct-credit activities. Most preferential interest rates abolished as well.s


Computerized exchange trading system put in place.e


Controls on outward and inward foreign investment were gradually eased. Mehrez and Kaufmann Liberalization date. a1


Minimum and maximum bank interest rate ranges introduced. Interest rate restrictions on interbank lending abolished. Banks allowed to issue CDs at rate higher than for time deposits.s


Amendment to the Foreign Capital Inducement Act, a negative list system was introduced which permitted foreign investment in all areas not on the list. Foreign equity participation of up to 100% is allowed in a limited number of industries.a


Korea Fund launched on NYSE with a net asset value of $235.9 million as of December 1991.aa


Foreign bank branches were given access to the rediscount facility for export financing at the Bank of Korea on the same terms as domestic banks. Use of swap arrangements as the principal means of local currency funding by the foreign banks would be scaled down gradually and for 1985, the ceiling would be reduced by 50% of the total local currency raised through the Bank of Korea's rediscount facility. The margin requirement on swap transactions with foreign bank branches was reduced from 1% to 0.75%, and these branches were placed on the same basis as domestic banks in being made subject to the requirement that at least 25% of loan increment be extended to small and medium firms.a3(first entry)


The value limit on investment trusts through which foreign residents could indirectly invest in Korean bonds and equity was raised by US$30 million.a3


Authorization was granted for foreign participation in 102 of the 339 previously restricted industrial areas, increasing the number of industrial sectors accessible to foreign investors from 660 to 762, and raising the liberalization ratio for capital from 66.1% to 76.3%.a3


Authorization was granted for eligible firms to issue abroad convertible bonds and depository receipts in amounts up to 15% of their current market capitalization; holdings of such financial instruments by each foreign investor were limited to 3% of the issuing company's paid-in capital.a3


Foreign branches of Korean banks were permitted to issue won-denominated traveler's checks.a3


The fixed yield on foreign exchange swaps by foreign branch banks with the Bank of Korea was reduced from 0.75% to 0.5%. The maximum maturity of import usance bills for non-oil imports was reduced from 90 days to 60 days.a3


Eligibility requirements for approval of new foreign commercial loans were tightened to discourage such borrowing, while ensuring that Korean borrowers contracted foreign loans on the best possible terms.a3


Regulations governing the contracting of external and foreign currency loans were tightened further.a3


Foreign banks granted access to Central Bank's discount rate. a


Set up an OTC market for equities.s


Trade liberalization measures announced.a


An additional 26 manufacturing sectors were opened to foreign investment, leaving 13 of the 522 manufacturing sectors closed to foreign investment.a3


Domestic banks were authorized to extend the usance period from 60 days to 90 days for imports of raw materials and parts from countries with which Korea has a trade surplus. The usance period for Japan and other neighboring countries remain at 30 days, regardless of trade balances.a3


Imports from countries with which Korea has a trade surplus were not made eligible for importation on a usance basis without the requirements regarding the tariff level. a3


To encourage overseas investment by Korean firms, the upper limit for overseas investment exempted from prior government screening was raised from US$2 million to US$3 million.a3


Certain tax privileges granted to attract FDI were reduced and after-investment controls relaxed to put foreign-invested companies and local companies on the same basis.a3


Restrictions on the purchase by Korean-owned companies of foreign real estate were liberalized. Korean businesses incorporated abroad were allowed to retain up to US$500,000 of their operating profits, compared to US$100,000 in the past. Overseas investments of less than US$500,000 were authorized automatically if documentary requirements were met.a3


Overseas investments by Korean residents of less than US$1 million were to be automatically approved, and the upper limit on investment to be free from government screening was increased from US$3 million to US$5 million, regardless of purposes of investment.a3


Korean government outlines plan for liberalization. However, after the announcement the liberalization plan was put on hold due to an increase in money supply.e The liberalization plan defined two categories of industry, Limited and Non-Limited. Non-Limited industries will have foreign investment limits of up to 10% of market capitalization. Limited industries will have foreign investment limits of up to 8% of market capitalization. Furthermore, a limit of 3% is imposed for any single investor for any industry.e Most bank and non-bank financial institution lending rates and long-term deposit rates liberalized. Bank of Korea still controls short-term deposit rates, total volume of credit, and minimum credit guidelines to small and medium firms and conglomerates.s


Advertising and motion picture distribution were opened to foreign investment (minority foreign ownership in advertising industry and wholly owned subsidiaries in motion picture distribution), and restrictions on foreign investment in the Korean insurance industry were liberalized.a3


The limit on foreign exchange holdings for investment in foreign securities by Korean securities firms authorized to handle international businesses was raised from US$10 million to US$30 million. Insurance and investment trust firms were also authorized to hold up to US$10 million for such purposes.a3


The foreign exchange allowance for emigrants was raised to US$200,000 a household for current expenses and to US$300,000 for investment purposes.a3


Bekaert/Harvey Official Liberalization date. [NBER version].


Foreign subsidiaries and joint ventures were authorized to import and distribute all products except for 12 restricted items.a3


The limit for overseas investments by Korean residents subject to automatic approval was raised from US$1 million to US$2 million.a3


Korea accepted the IMF's obligations of convertibility.a


Unified the call money market, previously divided between the banking and non-bank sector.s Foreign exchange controls phased out.a


Requirements on overseas investment were liberalized. In addition to the abolition of the requirement governing the credit standing of investors, the minimum equity investment ratio was lowered to 20%, and the minimum interest rate for long-term loans was removed.a3


Nonresidents received permission to freely invest in six manufacturing sectors, regardless of their equity ratio, and the amount of new foreign investments permitted without reference to the capital review committee was increased from US$3 million to US$5 million.a3


Entry barriers for banks are lowered again. The establishment of new financial institutions is approved.a13


Passed legislation to convert investment finance companies to security houses.s


The ceiling on the value of the foreign investment subject to automatic approval was raised from US$3 million to US$100 million. The limit on foreign equity investment in advertising firms was increased to 99%.a3


ADR effective date. (Company=SAMSUNG CO. LTD. 144A GDR, Exchange=PORTAL)a11


Effective exchange rate replaced by a Market Average Rate determined in the interbank market based on a weighted average of rates for WON/U.S. spot transactions and allowed to vary within a narrow band.a


The limits on foreign exchange holdings for investment in foreign securities by domestic securities firms authorized to handle international business were increased from US$30 million to US$50 million, and by insurance and investment firms from US$10 million to US$30 million.a3


The wholesale of toiletries and cosmetics was opened to foreign investors.a3


First ADR is announced.aa


Ministry of Finance announced guidelines governing the opening of the securities industry to foreign institutions. The regulations call for a high entry fee and a required commitment of at least 10 years. No more than ten licenses are expected initially.


First exchange-traded overseas listing.a9


FDI were permitted in ventures involving the importation of alcoholic beverages wholesale.a3


Market opening to foreign investors.v Notification System makes authorization of foreign investment subject to approval or notification. Foreign participation will be easier under new law. Repatriation of capital freely permitted.a


A Notification System was introduced under the Foreign Capital Inducement Act, simplifying procedures for approval of FDI.a3


Government orders the thirty largest industrial conglomerates, whose sales account for 90% of Korean GDP, to focus on three core businesses. (Tight industrial policy).


The required ratio of the overbought foreign exchange position of foreign exchange banks was reduced to 1% of the preceding month's average total value of foreign exchange bought. Restrictions on the scope of foreign investment in the retail sector were eased with the number of retail shops per investment increasing to ten from one, and the max floor space per shop increasing from 700 square meters to 1000 square meters.a3


Announcement that stock market will open to investors in January of 1992. The announced regulations are that a foreign investor cannot own more than 3% of a company's shares and foreigners cannot own collectively more than 10% of a company. The government later raised the limit to 25% for 45 companies that already had more than 10% ownership by foreigners. The announcement is not well received by foreign investors. Korea admitted into the United Nations.


Korean subsidies abroad were permitted to obtain offshore financing without the prior approval of their prime credit bank for loans amounting up to $5 million.a3


Samsung, largest conglomerate, announced 2 subsidiaries would be separated from the group.


Republic of Korea and Democratic People's Republic of Korea concluded an agreement covering political reconciliation, military nonaggression and economic aggression.


Foreign investors were permitted to invest in the domestic stock market, subject to the restriction that foreign ownership of listed firms may not exceed 10% of total equity and individual foreign investors may not hold more than 3% of total equity.a3


IFC Liberalization date.i


Bekaert/Harvey Official Liberalization date. [Final version].


Kim and Singal Liberalization date.


Partial opening of the stock market to foreigners. Foreigners can now own up to 10% of domestically listed firms. 565 foreign investors registered with the Securities Supervisory Board.


Government approves lifting of foreign ownership restrictions on Korea Electric Power and Pohang Iron and Steel.


Investments in stocks by resident foreign financial institutions were subject to the same limits as those by national institutions. They were allowed to undertake over-the-counter transactions in listed bonds.a3


The overall limit of $200,00 each emigrant family is allowed to transfer was abolished, and limits would be established on a case-by-case basis. The regulations on direct investments abroad were liberalized. The limit on investments in securities, insurance, and investment trust companies was raised from $10 million to $50 million, and the limit on similar investments by companies with international business licenses and insurance companies with assets of over W 5 trillion was raised from $50 million to $100 million.a3


Korea Electric Power lifts foreign ownership restriction from 8% total and 1% per individual to 10% total and 3% per individual.


Pohang Iron and Steel lifts foreign ownership restriction from 8% total and 1% per individual to 10% total and 3% per individual. Kim Young Sam from the Democratic Ruling Party is elected as President. 


Implementation of a growth oriented 100-day economic stimulus package.


The number of restricted businesses for overseas direct investments by residents was reduced from 17 to 14 and the limit on the amount of investments foreign exchange banks are authorized to approve was increased to $300,000. The ceilings on the amount that resident corporations operating abroad and their overseas branches may borrow from nonresident financial institutions located abroad were abolished. The limit on the amount of foreign exchange resident business firms may retain abroad was increased to the equivalent of 30% of their total import and export values, with the maximum increased to $300 million form $100 million.a3


President Kim implements the Real Name Financial System to help cut down on corruption by government officials and private recipients of government favors. Implementation led to panic by small investors. False name accounts were given 60 days to transfer funds to real name accounts to avoid maximum penalty of up to 60% of total account value.


Sixty day amnesty period concluded in implementation of the Real Name Financial System. Panic quells as uncertainty over the business climate abates. By the end of 1993 foreigners own up to 9.8% of market capitalization and close to 9% of shares outstanding. Most companies have reached their 10% limit of foreign ownership restrictions.


Cash deposits for buy orders put into effect. The limit was quickly increased to 40% of purchase value for institutional investors and 80% of purchase value for individual investors. Later the deposit amounts were reduced by half to 20% for institutional and 40% for individual investors. The stock transactions tax was decreased from 0.35% of sales value to 0.2%. Finally, several IPOs hit the market including Samsung Heavy Industry, Goldstar Industrial System, Citizens National Bank, and Industrial Bank of Korea.


The overseas borrowing limit for high-technology foreign-financed manufacturing companies was raised from 50% to 75% of the foreign-invested capital. The deferred payment period on imports of raw material for exports was liberalized, from 30 days to 60 days for countries in the region. General manufacturing industries were included in the types of foreign-financed companies that are eligible for short-term overseas borrowing.a3


Overseas stock investments of institutional investors were liberalized. Companies whose total export and import value exceeds $10 million were given institutional investor status. The limit on the amount of investments foreign exchange banks are authorized to approve was raised to $300,000, of resident corporations operating abroad and their overseas branches may borrow from nonresident financial institutions located abroad was abolished, and of foreign exchange resident business firms may retain abroad was increased to 30% of their total import and export value, with the maximum increased to $300 million from $100 million.a3


The list of restricted overseas foreign investment by residents was shortened to 14 categories from 17.a3


Foreign firms were allowed to engage in business operation within three hours of submitting notification (previously 20-30 days).a3


Rules governing land acquisition were liberalized.a3


The deferred payment period for imports was further liberalized. Residents were permitted to hold foreign exchange freely without limit and retain foreign exchange proceeds from exports without surrendering them to a foreign exchange bank or depositing them in foreign currency accounts in banks.a3


Direct overseas stock investments by residents up to a limit of W 100 million were allowed, and FDI in equity-linked bonds were allowed. The purchase of government and public bonds was allowed in the primary market.a3


Floating rate notes were permitted to be issued in the domestic market.a3


IPO of Industrial Bank of Korea ($2.7 billion) and the last round of auction for Korea Telecom ($1.7 billion).


Government announced that institutional investors would be exempt from the cash deposits of 20% for buy orders as of January 1995. Limit of foreign ownership of domestically listed firms raised from 10% to 12%. KEPCO and POSCO retain their limits of 8%. Government announces its intention to raise the overall limit from 12% to 15% sometime in 1995.


The following measures have been introduced: (1) limits on investments in securities were abroad by pension funds and short-term financial companies were abolished, and that for enterprises or individuals was increased; (2) overseas deposits were allowed up to under $100 million for institutional investors, up to $1 million for other firms, and up to $30,000 a year for individuals; (3) institutional investors were allowed to extend credit to nonresidents up to $10 million, and to others, up to $300,000. The foreign exchange concentration system was suspended, and residents were allowed to hold foreign currency without registering at banks; (4) the exemption from overseas credits collection requirement was raised from $20,000 to $30,000; (5) the types of firms allowed to hold deposits overseas were expanded and the limit on the amount of foreign currency that could be held abroad by contraction companies was raised from 10% to 20% of the balance of the construction contract; (6) the scope of items eligible to be deposited in, or withdrawn from, free won accounts was expanded.a3


Of the Korean Stock Exchange had 702 listed firms, 98 have reached their 12% foreign ownership limit. Overall, 8.6% of the total market capitalization was owned by foreigners.


Ministry of Finance lowered the margin requirements for stock purchases from 40% to 20%. Individuals will be able to borrow up to 100 million won from brokers for purchases. Brokerage firms can lend individuals up to 25% of their capital compared to the current 18%.


KSE trading in KOSPI 200 Index futures began. Announcement that stock options index will be launched in 1997. Announcement that foreign ownership limits will be raised from 12% to 15% in July.


International financial institutions were permitted to issue won-denominated bonds in the domestic financial market.a3


Foreign enterprises with high technology, firms engaged in certain types of "social overhead capital projects", and small- and medium-sized enterprises were allowed to borrow abroad for the financing of imports of capital goods..a3


Government raised foreign stock ownership limit from 12% to 15% and raised the limit for single investors from 3% to 5%. KEPCO and POSCO limits' raised to 10%. $1.3 billion of fresh foreign investment entered the market. Ministry of Finance plans to deregulate the securities business by lifting interest rate controls on margin accounts, easing government control on the international activities of securities firms, and permitting local securities firms to borrow from the cheap foreign-currency funds in order to underwrite overseas securities. Most importantly, the registration period for foreign investment will decrease from 14 to 5 days.


Government announced plans to tax fixed income instruments beginning in 1996. Investor confidence responded positively to the news. Government announced that foreign firms will be able to list on the Korean Stock Exchange as of 1996.


The restricted areas for overseas direct investment were reduced from 14 to 3. The application procedure was simplified significantly.a3


Rumors fly that former President Roe Tae Woo amassed an illegal political fund worth $650 million. Investor confidence wanes. Most of the money is thought to be held under false names in various financial institutions.


The negative list of FDI was shortened, raising the liberalization ratio to 95.1% from Jan.1 1996.a3


The limit on advances large enterprises are permitted to grant was extended from 5% to 10% of the firm's export volume in the previous year.a3


Former President Chun Doo-hwan is taken into custody for his role in a 1979 coup. This arrest followed the arrest of former President Roe Tae Woo for his accepting bribes from most of the CEOs of Korea's leading companies. The stock markets plunge.


The following measures are introduced: (1) regulations governing the foreign exchange positions of banks  were modified; (2)overseas deposits for asset diversification purposes were liberalized; (3) the ceiling of $10 million on foreign currency loans an institutional investor may extend to nonresidents was abolished, while those for general trading companies were raised to $3 million and $50,000 a year, respectively; (4) the remaining underlying documentation requirement was abolished for forward exchange and financial futures transactions; (5) within the scope of nonresidents' real demand, derivative transactions between foreign and domestic currencies were allowed; (6)the opening of a free-won account by nonresident in overseas branches/subsidiaries of a foreign exchange bank was allowed; (7) the ceiling for current transactions that were allowed to be deposited in and withdrawn from the free-won account was eliminated. Won currency funds deposited in the free-won account were allowed to be withdrawn  to invest in domestic stocks; (8) resident foreign exchange banks and institutional investors were allowed to extend loans on domestic currency to nonresidents up to W 100 million a borrower; (9) procedures for remittance of funds to be used for operating overseas branches of domestic firms were liberalized ; (10) export credits in the form of deferred receipts were liberalized; (11) the exemption from overseas credit collection  requirements was raised from $30,000 to $50,000; (12) the limit on the amount of foreign currency that may be held abroad by construction companies was raised to 30% of the balance of the construction contract or $3 million, whichever is greater; (13) the head of emigrating family was allowed to transfer up to $400,000, and other family members were allowed to transfer up to $200,000 a person.a3


The ceilings on securities investments by residents were abolished.a3


The issuance of deferred receipts by foreign companies was allowed.a3


Stock index futures began to be traded on the existing stock exchange, and nonresidents' access to the market was allowed within a limit of 15%.a3


The Korean government stopped efforts to artificially maintain and manipulate equities prices and the Stock Market Stabilization Fund was abolished formally. a8


Limit of foreign ownership of domestically listed firms raised from 15% to 18%. Futures begin trading on the Korean Stock Exchange on the KOSPI 200 Index. 


The extension of foreign currency credits abroad by resident institutional investors was liberalized. a3


The ceiling on export advances for large enterprises was raised from 10% to 15% of the export value of the previous year. a3


Short term abolition of the capital gains tax.


Government relaxes foreign ownership restrictions from 18% to 20% and from 12% to 15% for state owned enterprises.


South Korea opens its first won-yen exchange market, which aims to reduce transactions cost for market traders.


The ceiling on stock investments by nonresidents was raised twice. The ceiling on aggregate purchases rose from 15% to 20%, and the ceiling on individual purchases rose from 3% to 5%. Indirect investment in domestic bonds was allowed by means of the Country Fund. a3


The access of nonresidents to the stock index of the futures market was raised from 15% to 30%. a3


Government announced that in two years it will relax foreign ownership restrictions of telecommunications industry to 33%.


Government IPO of Korea Telecom.


Laeven's banking liberalization (FLI) dates.a13


The total quantitative ceilings on the issuance of foreign-currency-denominated securities abroad were raised.a3


Government announced plans to lift foreign ownership restrictions from 20% to 23% in May 1997.


Government raised foreign ownership restriction from 20% to 23%.


Trade surplus of $97.6 million, the first monthly surplus since December 1994. Kia's group faced financial problems.


The August trade deficit was $381 million, down from July's $806 million.


(Controls on direct investment) The debt limits on corporations making overseas direct investments, whereby 20% of investments exceeding $100 million had to be financed by a firm's own capital, were abolished.a3


Government would raise the foreign share-holding limit to 26% from 23% while state-run firms' limits would be raised to 21% from 18%, effective November 3. Foreign investors unload a $93.6 million worth of shares on October 21.


The limit of foreign ownership of Korean equitities was raised further.a3


The government abandoned its defense of the won and sought a $20 billion loan form the IMF.


Korea got a $55 billion bailout package from IMF. Won depreciated to 1,695 at the end of the month. The government announced a new 50% foreign investment ceiling, effective December 11. IMF and G-7 nations had pledged to expedite $10 billion in aid to Korea.


Legislation passed by the National Assembly established the FSC (Financial Supervisory Commission). The legislation consolidated regulation of the entire financial system under the FSC and its regulatory arm, the FSS (Financial Supervisory Service). The FSC came into being on April 1, 1998.a8


Foreign net inflow of $457.7 million in 1998 helped stabilize the won against dollar. S&P upgrade credit rating of select Korean bourse companies.


S&P upgraded the country's foreign currency debt rating by three notches, one grade below investment grade. The government lifted all restrictions on listed companies' right offerings from February 20. The Emergency Economic Committee agreed to let foreigners buy up to one-third of a company's shares without prior approval of the target firm's board of directors. Korean equities will be permitted to fluctuate within a 12% band beginning March 2.


The Japanese lenders agreed to support a plan to reschedule $24 billion in short-term Korean debt. Creditor banks will extend $21 billion of maturing bank debt up to three years, in exchange for government guarantee.


A weaken yen undermined Korean exporters' price advantage over their Japanese counterpart. 


(Controls on capital and money market instruments) Foreigners were allowed to engage in securities dealings, insurance, leasing and property-related business (Controls on direct investment) Foreign banks and brokerage houses were allowed to establish subsidiaries if their equity capital was more than W200 million.a3


The deposit requirement ratio which required that stock purchase orders be accompanied by a cash deposit was abolished.a8


The Securities and Exchange Commission was abolished and replaced by the Securities and Futures Commission (SFC). The SFC was placed under the newly formed Financial Supervisory Commission (FSC), which was established to serve as Korea's integrated financial institutions' regulator.a8


(Controls on credit operations) The MOFE abolished regulations on usage of long-term loans with maturities of over five years that are bought into the country by foreign manufacturers.a3


The foreign investment limit on Korean securities was lifted with the following exceptions: KEPCO & POSCO (30%), mining (49.99%), air transportation (49.99%), and information and communication (33%).


(Controls on capital and money market instruments) Foreigners are free to purchase domestic collective investment securities without restriction. (Controls on direct investment) Foreign investors were allowed to take over corporations, except defense-related companies, and the ceiling on the amount of stock foreigners may acquire in all companies without the approval of the board of directors was abolished. a3


(Controls on capital and money market instruments) Issuing of securities with maturities of one to three years abroad by corporations was allowed. (Controls on credit operations) Controls on corporate borrowing of one- to three- year maturities were eliminated. (Provisions specific to commercial banks and other credit institutions) Foreign exchange exposure limits for banks were introduced.a3


Jobless rate reached 7.6% in July, the highest monthly rate since 1966.


The allowable daily trading band for share price fluctuations will increase to 15% from the current 12% on December 7. A “circuit breaker” system will soon be introduced. The circuit breaker will suspend trading if the KCI drops by more than 10% within the day’s first minute of trading. 


Interest rates have fallen to about 7% from more than 30% earlier this year.


The government announced the economy contracted by 6.8% in the third quarter, its steepest decline in 45 years. 


Korean equities finished 1998 as the best performing emerging market, ending the year with a 121.1% gain in the dollar tallied IFCI Korea Index.


(Provisions specific to commercial banks and other credit institutions) The foreign exchange position system was changed from the net aggregate position system to the shorthand position system. The limits of the position were raised from 15% to 20% of the total equity capital at the end of the previous month.a3


S&P downgraded credit-rating for Kokmin bank and Shinhan Bank.


The Korea Stock Exchange reported that Korean companies raised a total of $1.8 billion worth of new shares via rights issues, 39% less than February, easing supply side pressureMoody’s upgraded its ratings of three state-run banks to investment grade.


Issuing of securities denominated in foreign currency by nonresidents was allowed as well as investment for deposits and trusts with maturities of one year or more by nonresidents. (Controls on derivatives and other instruments) The real demand principle imposed on financial derivatives was abolished. (Controls on credit operations) Borrowing with maturities of one year or less abroad and by corporations whose financial structure is should was allowed. (Controls on direct investment) Outward direct investments in excess of $10 million are no longer assessed by the Outward Direct Investment Advisory Committee, but require a notification to the MEF in the case when :(1) the liabilities of the parent company do not exceed its total assets and (2) the subsidiary has no negative net worth exceeding $100 million or half its capital and does not show a continuous five-year deficit. (Provisions specific to commercial banks and other credit institutions) Foreign exposure limit regulations were expanded to include all financial institutions participating in the foreign exchange business.a3


The  Korean banks said they would finish repayment of $3.7 billion in IMF loans during the next three months, ahead of scheduleIt was reported that beginning July 1, foreign investors will be allowed to own as much as  49% of most telecommunications operators


The government set May 26 as the listing date for the sale of its 13% stake in Korea Telecom.


Effective July 1, foreign investors were permitted to own as much as 49% of most telecommunication operators. Korean Telecom shares were to be listed in New York and London and were expected to raise $1.5 billion.


The market plummeted 16.7% in the five-day period proceeding reports of Daewoo's inability to service its $57 billion debt.


The government released a support package aimed at assisting in the redemption of unit trusts. The local KOSPI Index finished the year above the 1000 level, the first time since late 1994.


Korea invited General Motors, Ford, and other firms to bid for Daewoo Motors.


In mid-June, the first-ever inter-Korea summit between North Korea and South Korea took place. The U.S. eliminated many of its 50-year-old economic sanctions against North Korea. On June 27, DaimlerChrysler announced it would purchase a 10% stake in Hyundai Motors at the cost of US$ 428 million.


The government divested the troubled Hyundai company and its nine subsidiaries.


Ford decided to withdraw its offer to purchase Korea's faltering Daewoo. Daewoo was delisted from the Korean Stock exchange and would be splited up into three separate entities. A proposed U.S.-company purchase of Korea's Hanbo Steel fell through. Political conflict between the ruling Millennium Democratic Party and the opposing Grand National Party resulted in major delays in passing the 2001 budget, obtaining parliamentary approval on an additional 40 trillion won needed for bank restructuring; and getting a formal go-ahead to privatize the utility monopoly, Korea Electric Power Corporation.


The central bank cut 25 basis point overnight call rate to 5%.


The government announced an immediate 800 million won expenditure to boost the stock market. The Korean Teachers' Pension announced it would invest 50 billion won in the stock market as part of government efforts to shore up share prices.


The Bank of Korea lowered the overnight call rate three times in the third quarter to 4.0%.


S&P upgraded Korea's sovereign risk rating. Excise taxes were reduced.


South Korea's government is putting its hopes on the high-technology sector as a catalyst for growth and is willing to actively support the information technology (IT) sector with government funding of $10bn.


Group of 25 North Koreans defect to South Korea through Spanish embassy in Beijing, highlighting plight of tens of thousands hiding in China after fleeing famine, repression in North.


The South Korean government is to relax the provisions of the existing Foreign Investment Promotion Law.


The Bank of Korea (BoK) raised its key lending rate to 4.25% from 4.0% to head off rebound inflation.


Battle between South Korean and North Korean naval vessels along their disputed sea border leaves four South Koreans dead and 19 wounded. Thirty North Koreans are thought to have been killed.


President Kim Dae-jung's son, Kim Hong-Gul, was indicted on charges of bribery and abuse of influence, following earlier accusations that he had accepted shares worth around US$2.7m from businessmen in return for helping them win government contracts


South Korea's Ministry of Finance and Economy announced that it had tabled a range of new tax incentives aimed at attracting investment from abroad and helping the country emerge as a regional business hub.


Parliament has rejected President Kim Dae-jung's second nominee for the office of prime minister.


The Korean Confederation of Trade Unions (KCTU), called for walkouts to protest against new labor legislation. According to the amended labor laws, the five-day week will become effective at large workplaces with more than 300 employees from July 2004, while those with a minimum of 30 employees will be required to implement the changes by July 2006.


Roh Moo-hyun, from governing Millennium Democratic Party, wins closely-fought presidential elections.


President-Elect Roh moo-hyun has stated that he will seek a peaceful solution to tensions on the Korean peninsula, in co-operation with the US.


A suspected arson attack on the subway in the South Korean city of Daegu may have claimed more than 100 lives. This is one of the worst civil disasters ever to hit South Korea.


The central Bank of Korea (BoK) intervened to buy back W988bn (US$795.9m) of one- and two-year monetary stabilization bonds (MSBs) in a bid to stabilize debt markets


The Bank of Korea (BoK) has lowered the leading overnight call rate by 25 basis points to 4.0%, as downside risks shadow the slowing economy.


The United States and South Korea reached an agreement on US proposals to pull back around 15,000 troops from areas near the border to North Korea.


On 28 June, the police arrested more than 1,000 striking rail workers, a move that sparked off the union indignation. In response, the Federation of Korean Trade Unions (FKTU) called for its 800,000 members to stage a strike on 30 June, while the Korean Confederation of Trade Unions (KCTU) is planning to launch strikes from 2 July.


With effect from 10 July, the government is planning to implement proposals whereby foreign investors in high-growth sectors would be exempt from corporate and income taxes for seven years, and only half the standard rate for the subsequent three years.


The Bank of Korea cut the leading overnight call rate by 25 basis points to 3.75%, as leading indicators pointed to outright recession.


In a move to transform the corporate sector, which is dominated by family-owned conglomerates (chaebols), the government has announced that it will change inheritance and gift laws.


President Roh has quit the Millennium Democratic Party (MDP), but has yet to announce official ties to loyalists in the new party. On 20 September, 37 Roh loyalists departed the party also.


Biggest mass crossing of demilitarised zone since Korean War: Hundreds of South Koreans travel to Pyongyang for opening of gymnasium funded by South's Hyundai conglomerate.


The Grand National Party (GNP) successfully overrode President Roh Moo-hyun's veto of a bill appointing independent prosecutors to investigate corruption charges involving his former campaign aides.


The Bank of Korea (BoK) is considering major reform of the won. The currency will be made more user friendly through re-denomination, to allow for the issue of higher value notes.


LG Card - South Korea's largest credit card issuer - suspended cash advances again, raising the prospect of a bankruptcy that would have serious ramifications for the country's credit market and financial system.


Parliament approves controversial dispatch of 3,000 troops to Iraq.


President Roh Moo-hyun suspended after parliament votes to impeach him over breach of election rules and for incompetence.


Constitutional Court overturns vote by parliament to impeach President Roh Moo-hyun. He is immediately reinstated.


Prime Minister Goh Kun resigned.


US proposes to cut by a third its troop presence. Opposition raises security fears over the plan.


South Korea's President Roh Moo-hyun named former education minister Lee Hae-chan as his nominee for prime minister.


The government and the dominant Uri party reached agreement on a W4.5trn (US$3.87bn) supplementary budget for the second half of the year, to boost flagging domestic demand.


Regulations on Foreign Investors


Restrictions: 1. Ceiling on the aggregate foreign position is 15% (10% for major state-run companies, 25% for any company having issued securities overseas or involved in a joint venture with foreigners), and 3% for a single foreign investors. 2. Foreign direct investors must register with the SEC. All stock transactions by foreign investors must be made through the Korea Stock Exchange. 3. Foreign investment is restricted in tobacco, ginseng, utilities and some other sectors. 4 In the absence of an emergency, there are no restrictions on the repatriation of funds.

Taxation: 25% dividend tax rate and lower than 25% of gains or 10% of proceeds tax. Reduced rates if double taxation treaties exist with the investor's home country. Foreign investors with a permanent establishment in Korea are subject to corporate tax while non-residents are subject to both securities transaction tax and inhabitant tax levied on income tax and corporate tax at 7.5% of the tax amount.a5(first entry)


Restrictions: 1. The ceiling on the aggregate foreign position in any class of a company is 18% (10% in public utility industry, and 30% for any company issuing securities overseas or involved in a joint venture with foreigners), and 3% for a single foreign investor (1% in public utility industry). 2. Foreign direct investors must register with the Securities Supervisory Board (SSB) to receive an Investment Registration (IR) card. All stock transactions by foreign investors must be made through the Korea Stock Exchange.(same) 3. Same. 4 Proceeds of share sales and dividends may be repatriated with payment authorization of the foreign exchange bank. In the absence of an emergency, there are no restrictions on the repatriation of funds.(same) 5. Only limit orders are permitted, no margin transactions are allowed for foreigners. 6.Except some eligible institutions, foreign investors must deposit 40% of the transaction amount. 7. Non-resident foreigners are not allowed to purchase unlisted stocks.

Taxation: No change.a5


No change through 2001.a5


Restrictions: 1. The minimum investment requirement for a 'foreign-invested district' will be reduced from the current US$50 million to US$30 million. 2. Radio broadcasting and Television broadcasting are completely closed to foreign investors.

Taxation: 1. Foreign manufacturing firms investing over US$50m in the country will benefit from a seven-year exemption from corporate and income taxes. 2. Foreign firms will receive a 100% reduction in tariffs, excise and value-added tax (VAT) on imported capital products for a period of three years, together with a 100% cut in acquisition, registration, property and real estate taxes for five years.