[번역]'Overseas real estate investment also risky'

Those who invest in overseas real estate should take precautions as the property bubble could be an international issue, Kwon Tae-gyun, head of the international finance bureau under the Finance Ministry, said yesterday.

Following warnings from the government about a bursting of the housing bubble at home and a rescheduled deregulation plan that allows overseas real estate investment of up to $1 million from next week, Kim advised investors to get proper advice before investing abroad in an MBC radio interview yesterday.

In response to a question about the possible risks of investing overseas, Kwon replied that liberalization of direct investment abroad does not mean everyone can make money.

"Allowing overseas real estate purchases amounting up to $1 million for both actual demand and investment is largely aimed at balancing the current account and the capital account as well as stabilizing the currency exchange rate," Kwon said. The Ministry of Finance and Economy said on Thursday that it would advance its foreign exchange deregulation scheme by two years to 2009.

Some point out that those who wish to avoid inheritance and donation taxes could take advantage of the new rule by wiring more than $1 million split into smaller sums or using someone else`s name. Kwon said, however, that "it would be difficult to do so since those who send money abroad have to use registered banks and remittance of $300,000 or more is reported to the National Tax Service with documents that prove tax payment."

Kwon added that 99 percent of the Korean people would see the deregulation scheme as a step for liberalization of economic activities and would try to venture abroad. "As for the 1 percent that may attempt illegal acts such as tax evasion, we will tighten supervision to punish them," Kwon said.

(sophie@heraldm.com)

By Kim So-hyun