[EDITORIALS]Why incentives are futileThe government is engaged in an all-out effort to attract foreign investment. It has proposed offering real estate, tax breaks and cash assistance for building schools and hospitals. These incentives come belatedly, as other developed countries, including the United States, have already been providing free land to attract foreign business.
In the international business environment, Korea is no longer an attractive place to invest. “A quality workforce at a low wage” has long been a bygone characterization of Korea, and the country has become a place to avoid in terms of business practices and living conditions for foreign businessmen. Conditions have been deteriorating further recently as the government has lost direction in its labor policy.
There have been 27 cases of labor conflict at foreign companies so far this year, already more than in all of 2002. Seven companies have taken the extreme measure of shutting down operations here because labor is making unreasonable demands, such as being consulted in management decisions. Nestle has shut down its entire Korean operation ― first the Seoul offices, then the Cheongju plant. It is considering a pullout from the country.
Meanwhile, China has emerged as a more appealing destination for foreign businesses. Foreign investment in Korea has been falling for the fourth consecutive year. When companies that have been here are leaving, you have to wonder whether new companies would choose to invest in Korea, no matter what kind of cash assistance is offered.
Foreign investment has become critical to Korea’s economic survival. What is now more important than cash assistance is overcoming a too-strong labor movement, powerless authority, inconsistent policy and anti-business sentiment. What is needed are consistent policies, respect for law and principle and a cooperative relationship between labor and management. These would make for a sound environment conducive to business. Without them, no foreign business is going to come here, how matter how attractive the assistance package is.