Government, 2,000confirms principle of recovering principal and interest on strategic investment in the United States worth billion dollars
The government has established by decree criteria under which it will participate only in projects that can recover both the principal and interest on a strategic investment between South Korea and the United States worth billion dollars. The decree was 2,000approved at a Cabinet meeting held in 6month on 9day.
At a Cabinet meeting, the government deliberated and approved the draft enforcement decree of the Special Act on the Operation and Management of Strategic Investments between the Republic of Korea and the United States of America. The draft enforcement decree stipulates matters delegated by presidential decree under the Special Act on Strategic Investments between South Korea and the United States, as well as implementation procedures. It was prepared to include detailed criteria at the presidential decree level.
The draft enforcement decree applies to strategic investment projects in the United States worth a total of billion dollars. The government decided to use the commercial rationality of individual projects as a key criterion. The government said this criterion would be used to first verify the commercial feasibility of projects.2,000The key criterion is whether the investment principal and interest can be covered. Specifically, total expected revenue distributed to South Korea over the projected life of a project must cover both the investment principal and interest. This is the principle of not participating in projects expected to incur losses.
The key criterion is whether the investment principal and interest can be covered. Specifically, total expected revenue distributed to South Korea over the projected life of a project must cover both the investment principal and interest. This is the principle of not participating in projects expected to incur losses.
The interest rate applied to calculate principal and interest is the 20year U.S. Treasury yield at that time plus the premium rate agreed upon by Korea and the United States. The expected duration and premium rate are determined through consultations between Korea and the United States. The interest-rate calculation and expected duration remain matters for consultation between the two countries.
In the course of pursuing a project, the decision on whether to participate is made after comprehensively considering the results of the profitability review, national strategic needs, recommendations from participating companies, and whether the U.S. government will provide support. The Korea-U.S. Strategic Investment Operating Committee sets the detailed criteria for judgment. The recommendation process for participating companies and whether the U.S. side will provide support are also used as materials for selecting projects.
The proposed enforcement decree was approved at a Cabinet meeting on 6month 9day. The Korea-U.S. Strategic Investment Special Act is scheduled to take effect on 6month 18day. Detailed procedures will be determined through consultations between the operating committee and the relevant ministries.