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									                                                                                      Feb. 28, 2000

                                                                   Ministry of Finance and Economy

                                                          Foreign Press and Public Relations Division


                      KOREA ECONOMIC UPDATE

                                         < Highlights >

           Outline of Second Round of Reforms

           Policy Directives for the Second Round of Four Sector Reforms

                 1.   Financial Sector

                 2.   Corporate Sector

                 3.   Labor Sector

                 4.   Public Sector

           Four Sector Reforms of the Past Two Years

Outline of Second Round of Reforms

The second round of financial, corporate, labor, and public sector reforms is intended to

promote transparency and efficiency, as well as support the public interests of our society.

The restructuring will be completed by the end of this year and implemented with the

following three objectives:

       To pursue software reforms by expanding market infrastructure and revamping old-

        fashioned management styles;

       To enhance competitiveness by promoting profitability and technical innovation; and,

       To make the market mechanism work more efficiently, with market participants, i.e.,

        financial institutions, more actively involved.

    1. Financial Sector

        Financial sector restructuring aims to establish a competitive and sound financial
      system capable of supporting the development of the real economy.

      Bond markets are being nurtured so that more funds can be injected into rapidly

      growing, high value-added sectors. In tandem with this, stock markets are being

      developed and diversified.

   2. Corporate Sector

      A new economic atmosphere is being promoted whereby a company will be able to

      raise its profitability through pursuing technical innovation.

      Small-and mid-sized companies, along with venture companies, are being fostered

      to the extent that they become a focal point to the development of our economy.

   3. Labor Sector

      A new labor-management relationship is being established that emphasizes

      mutual respect and cooperation. In line with this, a more productive and

      comprehensive welfare system is being developed.

   4. Public Sector

      In the new era, an open and knowledge-based government will be established.

      The government will transform itself into an e-government suitable for the digital

Policy Directives for the Second Round of Four Sector Reforms

   1. Financial Sector

      Basic Directives

      The nation's financial landscape has seen great changes. On-line financial

      transactions have become part of everyday life; financial markets have become

      more liberalized; and banks have become more competitive through undergoing
      mergers and acquisitions.

      Taking this changed landscape into account, the second round of financial sector
reforms will be implemented focusing on the following three objectives:

      To develop a market-based financial structure;

      To transform the financial industry into a high value-added knowledge-
       based one; and,

      To complete the ongoing financial sector reforms.

Detailed Measures

(1) Reform of the Financial Market Infrastructure

      The bond market is being further developed in order to help domestic
       companies raise their funds more easily. For this purpose, both primary

       and secondary markets will be activated. The system of government bond

       issuance will be improved, the institutions related with government bonds

       will be streamlined, and intermediary firms between bond dealers will be

       established. The demand for bonds will also be broadened by diversifying

       types of bonds and by encouraging foreigners to invest in the nation's


      The government will help domestic companies strengthen their capital
       structures by developing the stock market. To this end, strategic alliances

       with stock markets in the Northeast Asian countries will be promoted.

       Concurrently, the KOSDAQ will be nurtured to become a sound market for

       small-and mid-sized venture companies.

      The capital market will become more diversified and the infrastructure of
       the financial market will be improved. In this vein, the stock market will

       be diversified through, for example, the introduction of a 3rd stock market.

       Measures to activate futures transaction will be devised. Pusan, the

       second largest city in Korea, will be nurtured as a futures trading market

       hub. Additionally, corporate accounting and external auditing systems are

       being developed in accordance with international standards.

      New types of electronic financial transactions will be devised. At the same
       time, ways to enhance electronic transaction security will be implemented.
(2) Improvement of Financial Industry Competitiveness and Establishment of

Autonomous and Accountable Management

      Transparency and accountability of corporate management will be
       enhanced by improving the corporate governance structure of the financial

       institutions. To this end, more than one half of financial institution board

       member seats will be filled with outside directors. In addition, financial

       institutions, including life insurance companies, will be encouraged to list

       in the stock market and to separate their management from ownership.

      Management of financial institutions will be innovated and financial
       experts will be nurtured. For this purpose, the government will encourage

       domestic financial institutions to adopt credit evaluation and combined risk

       management systems that adhere to internationally acceptable standards.

      Competition between financial institutions will be encouraged by
       incrementally allowing universal banking system. Financial holding

       companies will be established in an effort to nurture larger financial

       institutions. Corresponding to this, fire-walls between financial and

       industrial affiliates will be strengthened.

      New prudential regulations that are in line with global standards are being
       pursued. In this vein, establishment of new supervisory standards is a

       primary concern to ensure that banks are acting in accordance with the

       global principles. New capital adequacy ratios will be introduced as well. A

       system that monitors total credit to the companies will be established to
       reduce financial institutions' exposure to potential risks.

(3) Completion of Financial Restructuring

      The ongoing financial reforms will be completed as scheduled;
       management of investment trust firms will be normalized as soon as

       possible; troubled life insurance companies will be sold off; and the Seoul

       Guarantee Insurance Company will have its capital structure improved. A

       new CEO for the Seoul Bank will be appointed soon. Banks undergoing

       management normalization programs will have their management

       improvement plans strictly monitored. Troubled credit unions will be

       reorganized, while sound ones will be transformed into specialized
           financial institutions for retail financing.

          The voluntary restructuring of the financial institutions will be facilitated.
           The government will encourage domestic financial institutions to

           restructure themselves in order to become more competitive in the

           international market. Privatization of those financial institutions that the

           government helped recapitalize will also be completed as soon as possible.

           Public funds injected to resolve non-performing loans (NPLs) and
           recapitalize banks will be recouped as soon as possible.

2. Corporate Sector

   Basic Directives

   In the corporate sector, relevant laws and institutions have been reorganized.

   However, corporate management coinciding with market economic principles has

   not been fully established. With the advent of the digital economy, however,

   domestic companies are being required to raise their competitiveness, through

   either technical renovation or strategic alliances with other advanced companies.

   Based on these situations, the second phase of corporate restructuring will be

   implemented as follows:

          Capital structures of the companies will be improved by establishing
           advanced financial markets. In addition, the nation's chaebols will be

           encouraged to raise their profitability by focusing on their core


          Unviable companies will be immediately ousted from the market, while
           viable ones will be revitalized.

          Corporate governance will be further developed in conformity with
           international standards.

          A virtuous circle of technology renovation among large corporations,
           small-and mid-sized companies, and venture firms will be nurtured,
        leading to the enhancement of their competitive edges.

Acceleration of Corporate Sector Reforms

(1) Stabilization of the Corporate Financial Structure

       Companies that fail to satisfy the basic principles of the first round of
        restructuring will be required to strictly implement Capital Structure

        Improvement Pacts.

       Creditor banks will more strictly monitor respective company
        management. The new forward-looking criteria will also be applied to the

        non-banking financial institutions. Chaebol affiliates will be required to

        increase their capital soundness by adopting combined financial


       During the first half of the year, a comprehensive credit risk monitoring
        system will be established to evaluate the credit risk exposure of large

(2) Improvement of the Regulations and Laws in Relation to Troubled

Corporations' Exit from the Market

       Debt-workout programs will be more effectively implemented. During this
        year, a pre-packaged bankruptcy program will be introduced to reinforce

        the legal basis of the workout programs. To prevent moral hazard, the

        management practices of the companies under workout programs will be

        more strictly monitored. Corporate Restructuring Vehicles (CRV) will be

        established to ensure a smooth operation of the workout programs. The

        government will encourage creditor banks to set up CRVs in the form of

        either asset management companies or specialized corporate restructuring


       To ensure the swift exit of unviable companies, bankruptcy-related laws
        will be rearranged.

       The first round of restructuring will be completely finalized. When a
       consolidated company is set up as a result of industrial restructuring, the

       company will undergo virtual restructuring and sell off overlapping or

       excessive assets. A special task force will be organized to specialize in the

       restructuring the dismantled Daewoo Group's affiliates. Moreover,

       subsequent measures regarding foreign creditors of the Daewoo Group will
       be swiftly completed.

(3) Reinforcement of Market Disciplines

      Listed companies will be obligated to publicly announce whether or not
       they are abiding by "Codes of Best Practices." Additional measures to

       improve corporate governance, if necessary, will be considered.

      Accounting systems will be further upgraded to the level of international
       standards. To this end, companies are now being required to use

       combined financial statements.

      Intra-group loan guarantees of the 30 largest companies will be
       completely eliminated by the end of this March. And complementary

       measures for the limitations on stock investment into other companies,
       which will take effect in April 2001, will be prepared.

Reinforcement of Industrial Competitiveness

(1) Technology-oriented Renovation

      Domestic companies are being encouraged to invest in research and
       development (R&D). This will pave the way for their rebirth as companies

       that are internationally competitive. A core infrastructure necessary to

       develop capital markets and nurture technocrats will be expanded so as to

       maintain the recent fever on venture capital. A company named Dasan

       Venture will be established in April. Dasan will raise one trillion won of

       venture investment funds from both the government and the private

       companies and assist venture companies. Large corporations are being

       encouraged to accelerate their internal renovation by focusing on core

       competencies and expanding R&D investment. In addition, large
           corporations will strengthen their cooperation with small-and mid-sized

           venture companies through strategic alliances.

          In conjunction with the information technology (IT) industries,
           manufacturing companies will be nurtured to become another important

           pillar for the sound industrial structure through connecting themselves to
           IT revolution.

   (2) Establishment of Effective National Innovation System (NIS)

          In an attempt to boost corporate innovation centering on R&D, an
           effective NIS will be constructed. For this purpose, the government will

           expand its R&D-related budget and will nurture future strategic
           technologies, such as bioengineering and new materials. A technology
           Exchange Market will be launched in April to promote technology transfer.

   (3) Developing the Foundation for Globalization

          E-commerce will renovate overall business activities and become a major
           part of both business-to-business transactions and cyber-trade.

          As an effort to reduce expenses and to lay the foundation for companies
           to enhance their competitive abilities, the nation's logistics systems are

           being streamlined.
3. Labor Sector

   Basic Directives

   With a view to the development of a market-based economy, a new labor-

   management culture suitable for the 21st century is being nourished. The second

   round of labor sector reforms will be implemented based on the following


          Six policies will be implemented to promote the new labor culture that
           emphasizes cooperation and mutual trust.

          A more productive and comprehensive welfare system will be constructed
           to enhance job security and to develop abilities.
       Quality of living standards will be improved by narrowing the widened
        income gap between the rich and the poor.

       Labor market flexibility will be continuously pursued.

Detailed Measures

(1) Establishment of New Labor-Management Culture

Establishment of the new labor-management culture is a key strategy to survive

in the competitive 21st century. This strategy seeks to maximize the interests of

both parties.

The new labor-management culture will be nourished based on the following


       The results of corporate management decisions will be made more
        transparent to workers.

       Workers will be encouraged to develop their unique, special expertise.

       A gain-sharing system will be adopted to raise the morale of workers.

       An infrastructure for the cooperation of labor and management will be

       Institutional reforms will be continuously implemented through the
        Tripartite Commission.

(2) Expansion of a More Productive and Comprehensive Welfare System

To establish a more productive and comprehensive welfare system, policies aimed

at stabilizing employment and expanding vocational training will be implemented,

and the social safety net will be expanded.

       Employment services tailored to the diverse needs of each individual will be

        provided to job seekers. In addition, employment stabilization will be

        consistently sought after.

       Vocational training will be elastically implemented in consideration of job
        market   demand.    Vocational     training   associated   with   knowledge-based

        industries will be strengthened.

       The coverage of unemployment insurance will be extended. Consequently, the

        number of those who are eligible for unemployment insurance will increase.

        From July 2000, industrial accident compensation insurance will be applied to

        all businesses regardless of workplace size.

(3) Living qualities of middle-and low-income earners will be improved. For this

purpose, the income gap between the rich and the poor, which has widened since

the onset of the economic crisis in 1997, will be narrowed. This year, bills

prepared to improve the welfare of workers will be passed in the parliament.

       Efforts to help workers increase their incomes will be made. In this vein,
        employee stock ownership will be introduced even to the employees of

        unlisted companies. Tax credits will be given to those who keep unlisted

        company employee stocks for a long period. Companies will be advised to

        share their profits with their employees. A gain-sharing system is being

        introduced. Companies will also be encouraged to compensate their

        employees' good suggestions or ideas.

       Employees with low incomes will be supported in various ways. Laws that
        guarantee minimum wages will be applied to companies with four or less

        workers in 2000. At present, companies with more than five employees

        are required to keep minimum wage laws.

       Tax incentives will be given to mid-and low-income earners to increase
        their incomes. In addition, three trillion won has been allocated in 2000 to

        resolve the housing-related problems, compared with 900 billion won in

(4) Improvement of Flexibility of Labor Market

The labor market will become more flexible reflecting the transformation into the

knowledge-based era.

       Manpower-leasing systems are being encouraged. Measures to protect the
           status of leased workers will also be devised.

          The rights of daily workers will be strengthened. From 2002, daily workers
           will be eligible for unemployment insurance. Various types of vocational
           training suitable for daily workers will also be designed.

4. Public Sector

   Basic Directives

   To date, public sector reforms have been implemented focusing on hardware


   The second round of public sector reforms will be implemented as follows:

          Public sector reforms will be completed as scheduled. In particular, the
           reforms will put priorities on the agendas that focus on improving the


          The government will transform itself into an e-government and pave the
           way for a more customer-oriented and transparent government.

          A system will be constructed whereby government organizations make
           reforms continuously and voluntarily.

   Detailed Measures

   (1) Cooperation between government ministries will be strengthened.

          The positions of ministers of Finance and Economy, and Education will be

           raised to the deputy prime minister level. A Ministry of Women's Affairs will be

           newly organized.

          A Development Committee for Human Resources and a Ministers' Meeting on

           Welfare Policies will become actively operational.
      Voluntary reengineering will be pursued in each of the ministries.

(2) E-government will be accomplished at the earliest time.

      A Knowledge Management System will be established so that all the
       information circulating inside government organizations may be

       systematically managed and accumulated. Swift and accurate

       administration will be achieved by introducing e-administration, i.e., e-

       mail reports, electronic approval systems, and electronic data interchange.

       Public officials will be educated to sharpen their IT-related skills.

      The government's information system will be reconstructed so that people
       may gain access to the necessary information with ease. In this sense, a
       nationwide one-stop service will be operated to handle civil affairs. The

       civil affairs service will be provided for 24 hours through Internet.

       The government will reach a wider audience by communicating via the

       Internet homepages. E-mail IDs will be provided to 37,000 public officials
       this year.

(3) Improvement of Budget Management Institutions

      To achieve a balanced budget, the government will try to reduce the
       budget deficit. For this purpose, various ways to increase the efficiency of

       public spending will be devised. The management of government's

       external liabilities and assets will be more strictly monitored.

      The fiscal management system will become more transparent. Double
       entry bookkeeping will be implemented by the local governments. Various

       types of funds will be more systematically managed.

      The fiscal management of local governments will become more efficient
       and effective. Local governments are being required to check their capital

       soundness and make their fiscal status public. The central government will

       diversify its fiscal assistance to the local governments corresponding to

       their management accomplishments. In addition, the central government

       will evaluate the credibility of local governments when they issue local

(4) Reforms should be implemented in such a way that people really feel the

differences before and after implementation.

       A movement to reduce the number of civil appeals by half will be launched
        across all the government organizations. Every organization is being

        required to set up a Homepage Civil Appeal Database.

       Deregulatory reforms will be continuously implemented.

       A clean and transparent administration will be pursued to improve public
        services and eliminate corruption. An Online System for Management of

        Civil Appeals will be introduced to all government organizations.

       Reform agendas will be set up in cooperation with Non-Government

(5) State-owned companies and their affiliates will undergo continuous reforms.

       Privatization of state-owned companies will be implemented as scheduled.

       Various ways to raise the efficiency and transparency of management will
        be introduced.

The government will set this year as the first year of an "open and transparent

government." To this end, the government will make its utmost efforts to ensure

that public sector reforms are embedded in the daily lives of people.

The main objectives of the public sector reforms are:

       To achieve a small, but efficient government;

       To develop corruption-free and customer-oriented public officials;

       To foster a convenient and efficient system of public service; and,

       To establish a system that best supports the private sector.
      These reforms will lay the foundation for a reliable and trustworthy government.

Four Sector Reforms of the Past Two Years

   1. Financial Sector

      The restructuring of the financial sector has been implemented based on

      international standards and procedures. As a result, the financial system has been

      normalized and its external credibility raised, laying the foundation for the
      recovery of real economy.

      (1) Exit of the Unviable Financial Institutions

      A total of 347 financial institutions, which were regarded as unviable or thought to

      cost too much to resuscitate, were exited out of the market through mergers,

      debt-equity swaps and liquidations.

               Exit Trends of Unviable Financial Institutions (97.12-99.12)

                               End-97 (A)        End-99 (B)       Difference (A-B)

       Banks                       33                   23               10

       Brokerage Firms             36                   30               6

       Insurance Firms             50                   44               6

       Others*                   1,973              1,648               325

       Total                     2,102              1,755               347

      * Merchant banks, Leasing companies, Investment trust companies, Credit unions

      Public funds have been injected to viable financial institutions in order to

      normalize their management persuant to their self-rescue efforts. By the end of

      1999, 64 trillion won in public funds was injected either to settle NPLs of financial

      institutions or to recapitalize them.

                         Outline of Financial Sector Restructuring
                                                                  (Unit: trillion won)

                  Purchase     of Recapitalization      Deposit         Total

                  NPLs (A)        (B)                   Payment (C) (A+B+C)

Banks                 17.28             14.59              13.33            45.2

Non-Banks             3.22              3.96               11.61            18.8

Total                 20.5              18.56              24.94            64.0

In a bid to set up market disciplines, shareholders, managers, and employees

have been required to take responsibility for unviable financial institutions. The

financial institutions that received public funds have undergone a special

inspection. Not only have the unviable financial institutions had their managers

reshuffled, but they have had the number of their employees and local branches


        Number of Employees of Domestic Financial Institutions

                         End-97 (A)     End-June, 99 (B)          Difference (B-A)

# of Employees               113,994            74,851                 39,143

# of Local Branches           5,987             4,852                   1,135

Measures have been prepared to prevent financial institutions from becoming

unsound. Forward looking criteria on par with global standards has been

introduced to financial institutions. In addition, an early warning system that

detects signals of financial instability has been established.

Management of financial institutions has become more transparent by adopting an

international accounting system. Management governance has been improved by

strengthening the functions of the board directors. A total risk management

system has been set up, while advanced loan classification provisions have been


As the financial reforms pay off, the nation's sovereign credit ratings rose to

investment grade and the spread on foreign depositary receipts greatly fell.

Standard & Poors, an international credit rating agency, raised Korea's sovereign
   credit rating to BBB- in February 1999, almost the same level before the outbreak

   of the crisis. Korea's real economy is rapidly expanding, as is shown by the fall in

   the number of bankrupt companies and the increase in the number of the new

   business start-ups.

   * GDP (%): (98) -5.8 ( (1Q, 99) 4.5 ( (2Q, 99) 9.9 ( (3Q, 99) 12.3

   * Dishonored Bill Ratio (%): (Dec, 97) 1.49 ( (Dec, 98) 0.12 ( (Dec, 99) 0.14

   * # of Start-ups / # of Bankrupt Firms: (97) 3.4 ( (98) 2.6 ( (99) 12.3

   * # of Venture Firms: (May, 98) 304 ( (Dec, 98) ( 2,042 ( (Dec, 99) 4,934

2. Corporate Sector

   Based on the five plus three principle of corporate reform, mutually agreed upon
   by large corporations and their creditor banks, the corporate sector reforms have

   been successfully implemented.

    The five basic principles of corporate sector reforms: (1) enhancing

    transparency; (2) eliminating cross-debt guarantees; (3) improving capital

    structures;    (4)   focusing     on      core   competencies;     (5)   strengthening

    accountability of major shareholders and management.

    Three additional measures: (1) improving management governance of the

    non-bank      financial   institutions;    (2)   regulating   internal   assistance   to

    subsidiaries; (3) preventing unfair intra-group transactions.

   As the corporate reforms have been implemented as scheduled, the financial

   structure of the top four chaebols - Hyundai, Samsung, LG, and SK - has been

   greatly improved. Excluding the dismantled Daewoo Group, the average debt-to-

   equity ratio of the four chaebols fell to below 200 percent at the end of 1999 from

   352 percent a year earlier, down 152 percentage points.

                   Debt-to-Equity Ratio of the Top Four Chaebols

                                                                        (Unit: trillion won)

                                 End-97                 End-98           First Half of 99

    Hyundai                        572                    449                   341
Samsung                    366                276                 192

LG                         508                341                 246

SK                         466                355                 227

Average                    469                352                 255

Of the companies ranked below 6th, those who were put under the debt-workout

programs have seen considerable improvement. As of the end of January 2000,

78 companies are under workout programs. Of these companies, 75 companies

signed memoranda of understanding with creditor banks.

Workout plans of the twelve Daewoo Group affiliates have all been settled. In

particular, on January 22, 2000, foreign creditors of the Daewoo Group reached

an agreement with the government to sell the loans owed by the ailing

conglomerate to the nation's banks, paving the way for the smooth restructuring

of Daewoo.

The nation's chaebols have virtually completed industrial restructuring of the nine

core sectors as of the end of December 1999. These sectors include

petrochemicals, semiconductors, aircraft, automobiles, electronics, oil refining,

power generation facilities, vessel engines, and rolling stock.

Oil refining: Hyundai Oil Refinery completed a takeover of Hanwha Energy's oil

refining unit (June 30, 1999)

Semiconductor: Hyundai Electronics completed a takeover of LG Semicon (July

7, 1999)

Rolling stock: A consortium of Hyundai, Daewoo, and Hanjin established a

consolidated company (July 1, 1999)

Aircraft: A consortium of Hyundai, Samsung, and Daewoo established a

consolidated company (October 1, 1999)

Power generation facilities and vessel engines: Hanjung took over the units

of Hyundai and Samsung Heavy Industries (December 30, 1999)

In an effort to reinforce management transparency and accountability of domestic

companies, relevant laws and institutions are being reorganized compliant with

international standards. The following efforts have been made:
         Management transparency has been improved through the revision of the
          accounting system. Since FY' 99, listed firms have been required to adopt

          more comprehensive accounting standards and to make combined

          financial statements.

         The financial structure of domestic companies has been strengthened. For
          example, large corporations have been required to make capital structure

          improvement agreements with their creditor banks. In addition, limits on

          the equity investments or credits to their affiliates by the thirty largest

          conglomerates have been introduced. New loan guarantees between

          chaebol affiliates have been strictly banned and large corporations are

          required to wipe out the existing debt guarantees by the end of March


         Tax incentives have been provided to companies that swap their
          businesses with other companies. The government has given tax

          incentives on the parts of corporate income tax, capital gain tax, and

          special value-added tax arising from such business swaps. These
          measures have aimed to facilitate business M&As.

3. Labor Sector

   By reforming the labor sector, the rights of workers have been strengthened,

   coverage of social welfare has been widened, and labor market flexibility has been


         The basic rights of workers have been strengthened. Teachers have been

          allowed to organize labor unions. In order to protect women workers, a new

          regulation titled Prevention of Sexual Harassment in the Workplace has been

          effective since February 1999. Various ways to provide more job opportunities

          to the disabled have also been developed, and a law to this effect was enacted

          in December 1999.

         The coverage of Labor Standard Law has been widened from a company with

          five or more workers to one with four or less workers. Additionally, minimum

          wage law coverage has been widened from a company with ten or more
            workers to one with five or more workers.

           A new labor-management culture is being nurtured. PR activities and

            education aimed at fostering the new labor-management culture have been

            strengthened. Tripartite Commission was legislated in May 1998, and the third

            round of the Tripartite Commission was launched in September 1999.

           Labor market flexibility has been improved. Since February 1998, companies

            have been allowed to lay off their workers for managerial reasons and a

            manpower-leasing system has been introduced.

           Protection of both the unemployed and the less fortunate has been

            strengthened. The coverage of both unemployment insurance and industrial

            accident compensation insurance has been widened. And since April 1999,

            unemployment insurance has been provided to all the jobless.

4. Public Sector

   Public sector reform has been implemented with a view to improving its
   productivity. This has also laid the cornerstone for the reform of other sectors.

   (1) Government

   As a result of the second restructuring, the government has become smaller, but

   more efficient.

                      Civil Service Employee Reduction Plan

                                           Actual                   Target

                               Year End-1997   Year End-1999    Year End-2001

    Total    Number       of
                                 162,000            26,000         136,000

    Number of Reductions                            17,000          26,000

   (2) State-owned Enterprises (SOEs)
SOEs have also been a target for thorough restructuring. Thirteen state-owned

companies, including The National Textbook Co. Ltd and Korea Technology

Banking Corp, have been privatized thus far. Among them, Korea Telecom,

POSCO, and Korea Electric Power Corporation have been sold to foreign investors

through the issues of depositary receipts (DR). Korea Ginseng and Tobacco Co.

and Korea Gas Corp. have been privatized through domestic public offerings.

By privatizing the SOEs, the government secured 9.3 trillion won in proceeds. The

privatization of the SOEs also contributed to the rise in Korea's international
credibility and helped overcome its economic crisis.

If you have any questions, suggestions, and/or comments, please feel free to call

the Foreign Press and Public Relations Division at (82-2) 503-9245, fax (82-2)

503-8653, or e-mail us at fppr@mofe.go.kr

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