|KIC CEO Choi Hee-nam|
The Korea Investment Corp. (KIC) is facing the same pressure as the National Pension Service (NPS) to stop investing in Japanese companies involved in Japan's wartime slave labor.
It was revealed Friday that the sovereign wealth fund invested 463.4 billion won ($380 million) in 2018 in 46 Japanese firms with ties to wartime forced labor during the 1910-45 Japanese occupation of Korea.
In response, lawmakers proposed a bill to revise the Korea Investment Corporation Act, to restrain the KIC from investing in those firms.
"Japanese firms involved in forced labor are trying to avoid their legal responsibilities, although 7.5 million Koreans suffered slave labor during the Japanese colonial period," said Rep. Kim Kyung-hyup of the ruling Democratic Party, one of the lawmakers who proposed the revision.
"The sovereign wealth fund should set up its principle for socially responsible investments, not only focusing on return on investments."
According to data the KIC gave Kim, the sovereign wealth fund invested $3.4 billion in 2018 in Japanese firms listed on the stock market. This was 7.4 percent of its total investment in foreign stocks.
In addition, the KIC's investment in Japanese bonds last year reached $6.9 billion, 14.4 percent of its total investment in foreign bonds.
The KIC is a sovereign wealth fund managing assets entrusted by the Ministry of Economy and Finance and the Bank of Korea. It has assets worth $144.5 billion.
In 2018, it promised to take environment, social and governance (ESG) criteria into account when making investments in foreign companies.
Kim, however, criticized the KIC for not coming up with specific guidelines earlier.
The Korea Times called the KIC for comment, but it has yet to respond.
As tension between Korea and Japan has escalated since Japan placed export controls on shipments to Korea, lawmakers have proposed a series of bills to revise laws to prohibit government-run institutions from investing in Japanese firms linked to wartime forced labor.
On Aug. 6, Rep. Kim Kwang-soo of the minor opposition Party for Democracy and Peace (PDP) proposed a bill to restrain the NPS from investing in those firms.
The NPS has faced criticism since it was revealed that the pension fund invested 1.23 trillion won in 2018 in 75 companies involved in forced labor.
Although the Ministry of Health and Welfare supervising the NPS has been reluctant to restrict the investments, NPS Chairman Kim Sung-joo hinted it may cut ties with those Japanese firms.
According to the Financial Times, an English-language international daily newspaper owned by Japanese company Nikkei, the chairman said: "We are in the process of adopting a new guideline of responsible investment and we are reviewing whether Japanese war crime companies should be excluded from our investment list.
"In order to do that, we need to develop a clear definition of 'war crime companies,' whether they actually participated in war crimes."