Introduction to SOUTH KOREA South Korea has the fourth largest nominal GDP in Asia (USD 1.4 trillion in 2016). Economic growth slowed from 4.4% per year in 2002-2011 to (a still fairly good) 2.8% in 2012-2016 due to the deterioration in world demand and internal shocks, but also due to structural factors, including: Korea s over-dependence on exports and thus high vulnerability to the slowdown in Chinese growth and weakening in global trade; low labour productivity of SMEs (vs. large corporates); high private-sector debt; rapid population ageing, and a distorted labour market. Therefore, the government that took office in 2016 will have to implement ambitious reforms, particularly to support the development of SMEs, curb the dominance of chaebols and tighten their governance standards, whilst continuing to address the private-sector debt issue. External accounts have become a source of strength for South Korea, which enjoys large current account surpluses and comfortable external liquidity and solvency indicators. South Korea has an open capital account and a large stock of foreign equity investment, which make it vulnerable to sudden capital outflows. While this remains a potential source of financial volatility, the won is also supported by South Korea s strong macro fundamentals (solid public and external accounts, prudent policymaking). The currency has strengthened against the US since the beginning of 2017. Summary BNP Paribas presence BNP Paribas has been present in South Korea since 1976 and is a leading bank in the country. It is one of the few international banks catering for customers' domestic and international cash management and trade finance requirements, both foreign companies doing business in Korea and Korean entities seeking to expand their international focus. Working with BNP Paribas BNP Paribas is a member of the local clearing house and provides comprehensive payments, collections, cash and liquidity, and international trade finance solutions. Clients have access to over 1,038 branches through our partner bank, providing extensive geographic coverage within the country. In addition to the bank's extensive portfolio of cross-border services, BNP Paribas offers a variety of solutions specifically designed to meet customers' needs in Korea, as detailed in the BNP Paribas Capabilities section under Cash Management below. BNP Paribas is a major player in trade finance throughout Asia, offering a full suite of traditional trade (letters of credit, bankers guarantee, trade financing, standby letters of credit, etc.) and supply chain financing solutions (receivables purchase programmes, supplier financing etc.) products, including a unique inventory solution offered through its trade centres in Australia, China, Japan and Singapore, specifically for companies engaged in international trade, as part of a wider network of more than 100 trade centres globally. BNP Paribas has experienced trade finance advisors and personnel who deliver a range of customised trade solutions and advise on local market practices. These solutions are supported by the bank's ISO-certified trade services support team. The bank is one of only a few globally to have processed a live Bank Payment Obligation ('BPO') transaction, and was the first bank worldwide to transmit information via SWIFTNet Trade for Corporates.
Currency Currency South Korean Won (KRW). Bank accounts Resident / non-resident status A company is considered resident in South Korea if its place of effective management is located in South Korea. Bank accounts for resident entities Within South Korea Outside South Korea Local Currency Permitted without restriction, not freely convertible Permitted, not freely convertible. BOK notification required for individual s transfers exceeding USD 50,000. Foreign Currency Permitted without restriction, convertible Permitted, with Ministry of Strategy and Finance (MOSF) notification. BOK notification required for individual s transfers exceeding USD 50,000. Bank accounts for non-resident entities Within South Korea Outside South Korea Local Currency Permitted with restrictions, not freely convertible. Remittances from accounts abroad require BOK notification. Permitted with restrictions, not freely convertible Foreign Currency Permitted with restrictions, not freely convertible Not applicable Payments & Collections
Credit transfers Credit transfers are used by companies to pay salaries and suppliers, and to make tax payments. High-value and urgent KRW-denominated credit transfers are settled on a same-day basis via BOK-Wire+. Low-value and non-urgent KRW-denominated credit transfers are settled on a next-day basis via retail payment systems run by the KFTC. Pre-scheduled, low-value credit transfers are made via the Bank Giro System. Cross-border transfers can be made via SWIFT and settled through correspondent banks abroad.. Many banks have access to retail payments systems in Europe, including EURO1, STEP1, STEP2 and TARGET2. Direct debits Direct debits are used for regular payments, such as utility bills. Direct debits are usually preauthorised through standing orders. Companies can collect high-value payments from multiple payer accounts into a single collection account using the CMS debit transfer. Direct debits can be settled via the Bank Giro system on a three-day cycle. Liquidity management Domestic: notional pooling Domestic notional cash pools are not permitted in South Korea. Domestic: cash concentration Domestic cash concentration structures are widely available. Resident and non-resident bank accounts can participate in the same cash concentration structure within a single legal entity. Cross-border notional pooling Cross-border notional cash pools are not permitted in South Korea. Cross-border cash concentration Cross-border cash concentration is restricted by South Korea's exchange controls as it is not permitted to trade the KRW outside of South Korea. International trade General trade rules As a member of the Asia-Pacific Economic Cooperation (APEC) forum, South Korea has agreed to liberalise trade and investment rules between members.
Imports / exports Imports Machinery Electronics and electronic equipment Oil Steel Optical instruments Primary Import sources China (20.7%) Japan (10.5%) USA (10.1%) Germany (4.8%) Saudi Arabia (4.5%) Exports Semi-conductors Wireless telecommuni-cations equipment Motor vehicles Auto parts Computers Export markets China (26%) USA (13.3%) Hong Kong (5.8%) Vietnam Kong (5.3%) Japan (4.9%) Transport equipment Organic chemicals Plastics Home appliances Steel Ships Petro chemicals Import / export volumes 2012 2013 2014 2015 2016 - goods USD m 603,509 618,157 613,021 542,881 511,776 - services USD m 103,533 103,739 112,106 97,731 92,828 - goods USD m 554,103 535,376 524,135 420,612 391,330 - services USD m 108,747 110,238 115,784 112,647 110,436 4.2 6.2 6.0 7.7 7.0 Exports Imports Current account as % GDP Source: IMF, International Financial Statistics, May 2016 Market data updated as of 01/08/2017