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Finance minister calls for active investment overseas

South Korea's top economic official yesterday announced plans to change financial rules to encourage more local companies and funds to invest abroad.

Finance and Economy Minister Kwon O-kyu urged financial institutions to improve their competitiveness through active investment overseas.

"The government will help local funds improve their ability dramatically to invest abroad," Kwon told reporters.

"We need a radical change in our financial rules," he said, vowing to revise tax codes and "unreasonable" regulations that have restricted outbound investment.

South Korea previously encouraged firms to invest within the country to create jobs, increase production and exports and boost domestic economic growth.

But the policy has resulted in the rise of the won, which raises the price of exports, and more foreign direct investment into the country than outbound investment.

Excess liquidity has also been cited as contributing to a surge in housing prices. Experts warned that a sharper-than-expected economic slowdown this year could cause a sudden collapse in prices, triggering a financial crisis.

Measures taken by the government to build more apartments and restrict mortgage loans have so far failed to work.

Kwon said the government's goal is not to push for a steep drop in home prices but to calm the market and gradually move them downward.
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