On March 2, the National Assembly of South Korea passed a bill to increase the capital of the Korea Trade-Investment Promotion Agency (KOTRA) from 50 billion won (US$42.5 million) to 300 billion won (US$255 million), which will enable the Korea’s trade promotion arm to handle government to-government (G2G) deals.
The capital of the organization was 200 million won in 1962, when it was established. It increased to 500 million won in 1972, five billion won in 1986 and 50 billion won in 2007.
Previously, it was point out that the capital of the KOTRA was rather small in view of the size of the South Korean economy and a change in economic environment. Opinions in favor of an increase in capital have been suggested with the organization’s functions and scope of business expanded by it becoming a defense contractor in 2011 and a contractor in government-to-government trading of general commodities in 2014.
The passage of the bill is expected to result in larger government-to-government contracts. The capital of an organization such as the KOTRA is directly related to its trustworthiness and, as such, the KOTRA can benefit from the passage of the bill in signing contracts with foreign enterprises and governments. The capital is currently more than 400 billion won (US$340 million) in the case of the same kind of organizations in Japan and Hong Kong, that is, the Japan External Trade Organization and the Hong Kong Trade Development Council.