Download NATIONAL ACCOUNTS: 2002 - Korea Financial Investment

Korea Securities Dealers Association
Daily News
NATIONAL ACCOUNTS: 2002 (PRELIMINARY)
Economic Growth in 2002 (Bank of Korea)(2003-03-22)
For the year of 2002, as a whole, Korean real GDP increased by 6.3 percent. This
was mainly attributable to the sustained pace of the increase in private consumption
and the sharp rebound in exports as well as the upturn of equipment investment
growth. Real GNI, though, grew 4.9 percent owing to the deterioration of the terms of
trade.
Looking at GDP growth by industry, that of agriculture, forestry and fishing
production marked a 4.1 percent decrease owing to the contracted rice harvest and
vegetables, and the decrease in fishing catches, which were only slightly offset by an
increase in animal husbandry. Manufacturing sector production rose by 6.3 percent,
spurred by the acceleration of heavy & chemical industry production such as
household appliances, semiconductors and telecommunication equipments.
Construction industry production rose by 3.2 percent owing to the expansion of
residential and commercial construction that counteracted the decrease of
expressway, harbor and airport structures construction. Services increased by
8.8percent, led by banking & insurance services and social & personal services.
Viewing GDP growth by component of expenditure, private consumption showed a
6.8percent rise owing to the increase in household spending on durables and
services. Fixed capital formation increased by 4.8 percent, owing to the upturn in
equipment investment, which was partially moderated by a smaller increase in
construction investment. Merchandise exports grew at a rate of 17.1percent on a
volume basis under the effect of a large increase in semi-conductors and
telecommunications equipment, computer and vehicle exports, which was partially
offset by a decrease in petroleum products, iron & steel and textile products.
Plans to Enhance the Accounting Transparency of Firms
Pursuing an Initial Public Offering
(Financial Supervisory Service)(2003-03-21)
Improvement in the KICPA audit review for firms pursuing and IPO
In an effort to enhance the accounting transparency of firms pursuing an IPO, the
Korean Institute of Certified Public Accountants (KICPA) will revise its audit review
business regulations to gradually in crease the number of IPO pursuing firms that
receive an audit review by KICPA from the current 30 percent and to give priority to
IPO pursuing firms over other firms for audit review. Moreover, to ensure that KICPA
completes it audit review before KSE or KOSDAQ completes its listing eligibility
review (preliminary approval) for firms pursuing an IPO, KICPA will form a
cooperative business management arrangement with KSE and KOSDAQ.
Strengthening of Sanctions on IPO pursuing firms involved in fraudulent financial
accounting and their lead underwriters that fail to discover such practices
If a firm pursuing an IPO is determined to be involved in fraudulent financial
accounting, FSS/FSC will impose stricter sanctions such as monetary fines, referral
to prosecutors, and restrictions on the issuance of securities and will impose strict
punitive actions on their lead under writers who fail to detect fraudulent financial
accounting of IPO pursuing firms such as the suspension of underwriting business
licenses.
Strengthening the listing eligibility review by KSE and KOSDAQ
KSE and KOSDAQ will strengthen their listing eligibility review by elevating review
expertise and focusing on material review items such as the internal accounting
transparency control system (e.g. the fund management system, the independence
of the board of directors and internal auditors, and the accounting system).
Listing restrictions for firms involved in fraudulent financial accounting
If an IPO pursuing firm is found to be involved in fraudulent accounting of the degree
that disqualifies it from meeting listing requirement, the firm will not be granted
approval for listing and cannot apply for listing for a certain period (e.g., 3 years).
Furthermore, if a listed firm is found to be involved in fraudulent accounting of the
degree that disqualifies it from meeting listing requirements, the firm will be de-listed
and restricted from re-listing for a certain period (e.g., 3 years). Listing regulations of
KSE and KOSDAQ will be revised to include these changes.
Activation of a whistleblower system to report disclosure violations
To encourage the reporting of disclosure violations such as fraudulent financial
accounting, FSS/FSC will state in its supervisory regulations that substantial rewards
will be given for whistle blowing of disclosure-related violations (currently there are
no stipulations on rewards). In addition, FSC/FSS will establish a separate icon on
its Web site to facilitate reporting while maintaining strict confidentiality for the
protection of whistleblowers.
Improvements in the due diligence of lead underwriters
On March 2003 FSC/FSS will provide plans to improve the due diligence of lead
underwriters of IPO pursuing firms based upon its examinations of the due diligence
operations of lead underwriters and the opinions of the IPO business staff of
brokerage firms. Moreover, FSS/FSC will review a measure that will require lead
underwriters to conduct due diligence on financial changes during the period from
the last day covered by the most recent financial statement to the date the
registration statement is submitted to FSC/FSS, in addition to their other
responsibilities.
Korea to Apply for IDB Membership
(Korea Herald)(2003-03-24)
Korea will apply for membership with the Inter-American Development Bank (IDB) at
the bank's 2003 annual meeting held in Milan, Italy, March 24-26, the Ministry of
Finance and Economy said yesterday.
Asia's fourth-largest economy has tried to join the bank since 1979, but no IDB
member countries were willing to reduce their quotas in the bank to allow for Korea's
membership, the finance ministry said.
IDB, the oldest and largest regional multilateral development institution, was
established in December of 1959 to help accelerate economic and social
development in Latin America and the Caribbean.
The bank has mobilized financing for projects that represent a total investment of
$273 billion. Annual lending has grown dramatically from the $294 million in loans
approved in 1961 to $7.9 billion in 2001, after peaking at almost $10.1 billion in 1998
The IDB's original membership included 19 Latin American and Caribbean countries
and the United States. Subsequently, eight other Western Hemisphere nations,
including Canada, joined the bank.
From the beginning, IDB developed links with many industrialized countries on other
continents and in 1974, the Declaration of Madrid was signed to formalize their entry
into the bank. Eighteen non-regional countries joined IDB between 1976 and 1993.
Today bank membership totals 46 nations.