South Korea's National Assembly passed a trio of exchange rate stabilization bills centered on the introduction of the Repatriation Investment Account (RIA) at a plenary session, as the won-dollar exchange rate breached the 1,530 won mark for the first time in 17 years. In addition, lawmakers approved 60 livelihood-related bills including an amendment to the Basic Act on Supply Chain Stabilization Support for Economic Security, aimed at responding to the global trade environment including tariff hikes under the Donald Trump administration.
The three exchange rate stabilization bills that passed the National Assembly on May 31 — including amendments to the Restriction of Special Taxation Act and the Special Rural Development Tax Act — allow investors who sell overseas stocks to receive capital gains tax deductions when they reinvest in the domestic capital market through an RIA. The deduction rate varies by the timing of the sale: 100% for sales by May 31, 80% by July 31, and 50% by December 31. The measure is designed to encourage so-called "Seohak ants" (Korean retail investors in overseas stocks) to redirect capital back to the domestic market, stemming dollar outflows and easing upward pressure on the exchange rate. The RIA account deposit limit is set at 50 million won, and the tax benefit will be introduced on a one-year temporary basis. A new capital gains tax deduction for currency hedging products will also be established to help individual investors manage exchange rate volatility risks.
The amendment to the Basic Act on Supply Chain Stabilization Support also cleared the National Assembly. Under current law, the Supply Chain Stabilization Fund's investment targets are limited to collective investment vehicles. With the bill's passage, the fund can now also invest in venture investment partnerships and new technology business investment partnerships.
The Foreign Trade Act was also approved to counter strengthening trade barriers by various countries. The amended Foreign Trade Act expands and strengthens the authority of the Minister of Trade, Industry and Energy to impose export and import restrictions or bans, enabling such measures when trade interests are continuously infringed. Lawmakers also passed an amendment to the Trade Support Act that strengthens assistance for companies harmed by trade disputes, as well as an amendment to the Special Act on Enhancing Corporate Vitality, which promotes competitiveness in crisis-hit industries such as petrochemicals and steel suffering from oversupply.
