"Expansion of Foreign Investment Raises Economic Security Risks... Security Review System Needs Strengthening"

Federation of Korean Industries and Assemblyman Kim Woni Co-Host

Seminar on Improvement Tasks for the Foreign Investment Security Review System

There has been a recommendation to strengthen the security review system for foreign investment in response to the expansion of foreign investments into sectors directly linked to national competitiveness.

The Federation of Korean Industries (hereinafter referred to as "the Federation") held a "Seminar on Improvement Tasks for the Foreign Investment Security Review System" jointly with Assemblyman Kim Woni, secretary of the National Assembly's Trade, Industry, Energy, SMEs, and Startups Committee, at the FKI Tower Conference Center on the 10th.

Kim Woni, Member of the National Assembly, Kim Changbeom, Vice Chairman of the Korea Economic Association, and other officials are attending the 'Foreign Investment Security Review System Improvement Seminar' held on the 10th at the FKI Tower Conference Center and posing for a commemorative photo. (From left to right: Noh Hyunseung, Director of the Korea Automobile Industry Cooperative, Choi Byungil, Director of Pacific Law Office Trade Strategy Innovation Hub, Kim Changbeom, Vice Chairman of the Korea Economic Association, Kim Woni, Member of the National Assembly, Cho Sujeong, Professor at Korea University, Park Heonjin, Head of Investment Policy Division at the Ministry of Trade, Industry and Energy.) The Korea Economic Association

Jo Soojung, Professor at Korea University School of Law, who delivered the keynote presentation, pointed out that "major countries such as the United States, the European Union, and Japan are expanding the scope of investment security reviews to include minority stakes, greenfield investments, and indirect controlling structures, thereby establishing comprehensive review systems based on economic security." She stressed that Korea also needs to supplement the scope, criteria, and procedures of its security reviews to match the standards of these major countries.

In the case of Japan, foreign capital acquiring just 1% of shares in core industries is subject to a mandatory pre-reporting requirement. The United States also includes minority investments in companies possessing core technologies, critical infrastructure, or sensitive information within its review targets. In Korea, under the current Foreign Investment Promotion Act, the review is limited to six areas: defense industry, strategic goods, national secrets, international peace, national core technologies, and national advanced strategic technologies. Additionally, foreign ownership must exceed 50% for the investment to fall under review.

Park Heonjin, Head of Investment Policy Division at the Ministry of Trade, Industry and Energy, emphasized the importance of investment review through security screening, stating, "Now, beyond the scale of foreign investment, it is crucial to consider the type of investment and its potential impact on our industry and future."

Noh Hyunseung, Director of the Korea Automobile Manufacturers Association, explained, "The automotive industry is a supply chain industry with thousands of partner companies. If key parts suppliers are acquired by foreign capital, it could have an impact on the entire industry ecosystem through relocation of production bases, supply chain disruptions, or changes in price-setting power."

Experts agreed that strengthening investment security reviews does not conflict with attracting foreign investment.

Ryu Seongwon, Head of Industrial Innovation at the Federation, stated, "Security reviews are not mechanisms to block investment, but are institutional measures to protect strategic industries and selectively attract sound investment." He noted that, as in Germany, it is possible to expand the scope of security reviews while also streamlining procedures to effectively screen investments related to strategic industries. Last year, Germany approved about 40% of foreign investment reviews (339 cases in total) within 30 days, and most of the remaining cases were swiftly approved within one to two months.

Kim Changbum, Vice Chairman of the Federation of Korean Industries, is giving a greeting speech at the 'Seminar on Improvement Tasks for the Security Review System of Foreign Investment' held at the FKI Tower Conference Center on the 10th. The Federation of Korean Industries

In his opening remarks, Assemblyman Kim Woni said, "Foreign investment remains a key driver of our economic growth," but also stated, "Given that foreign investment in strategic technologies and core infrastructure can have both direct and indirect impacts on national industrial competitiveness and security, it is necessary to improve the security review system by clarifying legal grounds and procedures to allow for systematic evaluation."

Kim Changbeom, Vice Chairman of the Federation, also emphasized, "Today, foreign investment is evolving from simple capital inflow to strategic investment directly connected to technology, data, and supply chains. In this environment, the security review system serves as a key foundation for managing economic security risks and creating a stable investment environment by protecting strategic technologies and preventing circumvention investments."

This content was produced with the assistance of AI translation services.