February 2013 Edition 17
Welcome This is the latest edition of “Hot Issues” from Burson-Marsteller’s Global Public Affairs Practice. Every month, “Hot Issues” focuses on new forthcoming legislative or policy issues that will impact business from around our global network of 158 offices in Latin America, Asia-Pacific, Europe, Middle East, Africa and North America. The public policy dynamics in each country, let alone a particular region can be very different, demonstrated by the different experts we utilise in the countries where we operate. Conversely, there are similarities and you can see this in some of the issues we have picked out. Hot Issues are designed to give you a flavour of our global perspective and should any of the items raise particular interest with you, please contact the designated person listed with that issue.
Korea: Tighter Government Controls on Foreign Exchange Transactions The South Korean Government has been active in defending the won since it surged against the dollar from May 2012 and recently strengthened to below 1,060:1 (KRW:USD). While a stronger won may contribute to robust domestic consumption, as Korea is a manufacturing and export-driven country, a declining won-dollar exchange rate means the country’s major exporters, such as electronics and automotive companies, will find it increasingly less profitable to sell their goods overseas. In an effort to defend the won, the South Korean government has been exploring measures to stabilize the currency, including modifying how the cap on banks’ foreign exchange forward position ratio is applied; increasing the bank levy on foreign borrowing; and modifying the tax ratio on foreign bond investments amongst other measures, under a phased approach. Commentators have speculated that the government may also implement a Tobin Tax, an excise tax on cross-border currency transactions to restrict hot money flows, but this is not seen as a likely measure as President-elect Park Geun-hye is officially against such a tax.
South Korean central bank Governor Kim Choong-soo has also said recently in a meeting with foreign correspondents, that the Bank of Korea’s role is to control volatility in the currency through “smoothing” operations. The South Korean government’s policy on exerting control over foreign exchange transactions is of great interest to the financial industry, and foreign investors who are involved in exchange speculation. BursonMarsteller Korea stands ready to apply its expertise in financial communications and government relations to help investors monitor public discussions on this issue against the backdrop of significant political change, and to manage stakeholder relationships including government officials, lawmakers, interest groups and local communities as the country prepares for the inauguration of a new President.
Contact Melody Wong - melody.wong@bm.com
India: Upcoming Implementation of The Companies Bill 2012 The Companies Bill 2012 was passed by India’s Lower House of Parliament on December 18, 2012. The legislation seeks to bring radical changes to the manner in which corporates are run. Besides a statutory provision for Corporate Social Responsibility (CSR) spending, the Bill limits the liability of independent directors, provides fixed terms for independent directors, mandates appointment of women directors, and calls for
rotation of auditors, among others. The Bill replaces The Companies Act 1956 and is likely to be tabled in the Upper House of Parliament in the Budget session to be held sometime in February 2013. Officials are targeting the beginning of the new financial year (April 1) as the effective date for the new Act. Passage of the new Companies Bill, with as many as 470 clauses, will present a range of new provisions for the corporate sector to address.
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