[Intl-tobacco] Korea to open up tobacco industry to foreign interest

[Robert Weissman]

Asia Business Brief: Korea to open up tobacco industry to foreign
interest

by BridgeNews
Source: NewsEdge, Monday, 10/30/00

Seoul--Oct. 27--South Korea is proposing to deregulate its tobacco
industry, currently monopolized by the state-run Korea Tobacco and
Ginseng
Corporation, to allow foreign companies to produce tobacco products in
Korea,
the Ministry of Finance and Economy said Friday.

The ministry submitted the proposal to the ruling Millenium Democratic
Party during a policy meeting held Friday.

Once the proposal gains approval by the party, the ministry will submit
a
new bill to the National Assembly for ratification within this year.

In line with its deregulation of the industry, it will also allow
tobacco
companies to decide on consumer prices of cigarettes independently.

"We hope the measures will contribute to strengthening competitiveness
of
the domestic tobacco industry as the monopoly by the state-run
corporation is
ineffective in boosting competition," said the ministry.

At the same time, the ministry ruled out financial assistance for
domestic
tobacco growers despite increased competition as such subsidies go
against
World Trade Organization regulations.

It is, however, expected to take a few years for foreign tobacco
companies
to actively participate in the market as it will take time to build a
manufacturing base here, according to an official in charge of
privatization of
Korea Tobacco and Ginseng Corporation at the ministry. End