Budget stalled in investment row
A controversial foreign investment bill remained the last hurdle to passage of the 2014 government budget and two other major pieces of legislation.But as of press time, the ruling and opposition parties were still far apart.
A deal was still possible leading up to the end of 2013 and the start of 2014.
“We have to make the bill pass by tonight,” said Saenuri floor leader Choi Kyung-hwan before going into a meeting yesterday evening with Democratic Party floor leader Jun Byung-hun.
Although the two sides agreed on the budget and bills to reform the National Intelligence Service and tax codes, the revision of the foreign investment bill continued to be opposed by the opposition Democratic Party yesterday.
That bill passed the Committee of Strategy and Finance and reached the main floor of the National Assembly yesterday. It would ease a restriction on foreign investment in joint ventures between domestic and foreign companies.
Until now, a subsidiary of a larger holding company had to hold a 100 percent stake in a joint entity with foreign capital. The intention was to prevent Korean conglomerates from making reckless expansion through collobration with foreign companies.
The revised bill would lower that to 50 percent, making it easier for foreigners to invest in Korea.
A war of nerves reigned at the general Assembly between the ruling Saenuri Party lawmakers and those of the Democratic Party throughout the afternoon.
“Since the NIS reform bill, the budget, the foreign investment promotion and tax codes bills have been agreed to as a package deal, the foreign investment promotion bill should also be passed,” said Saenuri floor leader Choi at the meeting.
“If the investment bill is not passed, there will be no NIS reform bill passage,” said Yoon Sang-hyun, deputy floor leader of the Saenuri Party.
However, the Democratic Party didn’t change its stance that the easing of restrictions on foreign investments will only favor certain conglomerates like SK and GS. Democratic lawmakers insisted on putting off the issue until February.
“Conglomerates would have their own measures to resolve the problems even without the revised bill,” said Kim Ki-sik of the Democratic Party.
Park Young-sun, commissioner of the Legislation and Judiciary Committee, the last stage of passing a bill before a general vote, told the JoongAng Ilbo, “It will be difficult to pass the bill.”
About 2.3 trillion won ($2 billion) in additional investment, including foreign capital, is expected this year if the controversial bill is passed.
The Ministry of Strategy and Finance proposed the bill at the first trade and investment promotion meeting of the Park Geun-hye government last May as part of economic recovery measures.
The amount of foreign direct investment reported to the government this year dropped 4 percent to $10.75 billion compared to last year. Disagreement over the foreign investment bill could unravel agreements on the budget and tax revisions.
“If the Democratic Party doesn’t agree with the foreign investment bill, we can’t accept the taxing of the rich insisted on by the opposition party,” said Nah Seong-lin of Saenuri.
On Monday, both sides reached an agreement to widen the income range for those who will be charged the top income tax rate of 38 percent by lowering the current floor from 300 million to 150 million won.
BY SONG SU-HYUN, LEE SO-AH [ssh@joongang.co.kr]
with the Korea JoongAng Daily
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