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By Anna J. Park
The Korean government is set to increase the annual cap on foreign currency remittance that does not require additional documentation, up to $100,000 from July this year, from the current cap of $50,000.
The finance ministry announced the measures that will take effect from the second half of this year, on Thursday. The measures are a follow-up to the government's policy direction first announced in February to ease rules on public foreign remittances as well as corporations' foreign currency borrowing for the sake of improving convenience.
Currently, a person who sends foreign currency transfers exceeding $50,000 per year is required to submit documentation to prove the goal of the remittance. Under the changes, this requirement will be dropped. People can wire foreign currency transfers up to $100,000 a year without having to report, as long as the aggregated remittances are under the annual limit.
Ministry officials explained that the annual cap, created in 1999 when the Foreign Exchange Transactions Act took effect, does not suit the current economic size of the country.
Major securities firms will also be allowed to offer foreign currency exchange services, to increase competition among financial firms and to broaden consumers' choices.
Corporations will be facing an eased bar in the foreign currency borrowing limit. With the new rules, companies do not bear the obligation to report as long as their annual foreign currency borrowing does not exceed $50 million a year.
Following the administrative notice this month, the government plans to implement the revised rules early next month.
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