Bleak assessment by foreign firms
A total of 111 foreign companies, or 55.2 percent of the 201 surveyed, were negative about the conditions of doing business in the country, the KCCI said.
The survey conducted late last month cited a lack of consistency in policies with regard to foreign investment as the biggest reason behind the negative assessment. The excessive regulation, labor-management conflict and lack of social infrastructure such as education were also cited as reasons.
The survey came out after President Park Geun-hye promised representatives of foreign companies invited to the Blue House last Thursday to make Korea a top destination for foreign investors.
That was followed by the announcement of incentives to attract headquarters and R&D centers of multinational companies.
According to the Ministry of Trade, Industry and Energy, Korea’s foreign direct investment as a percentage of gross domestic product was only 12.7 percent, a third of the average for member countries of the Organization for Economic Cooperation and Development.
FDI in Korea hit a record high in 2012 of $10.61 billion, but last year it dropped to $9.48 billion, the ministry said Thursday.
“Major countries are making bold moves to attract foreign investment, which is one of the largest driving forces for economic development, whereas Korea has witnessed a decrease in foreign direct investment,” said Chun Su-bong, the head of the KCCI research division.
Of those surveyed, 32.9 percent think Korea is losing its appeal to foreign companies over the past three years, compared to 19.8 percent that think the opposite.
A majority of surveyed companies, 56.7 percent, said foreign investment in Korea will be similar to last year’s level, but 29.4 percent said it will dwindle more this year compared to last year, while only 13.9 percent said it will grow.
Those who said it will decrease this year cited an uncertain economic recovery (42.4 percent), the worsening investment environment (37.3 percent) and a decrease in demand for their goods and services (16.9 percent) as major reasons.
What foreign companies called for most (38.3 percent) was policies that are in line with the “global standard,” the survey showed.
An additional 30.3 percent said Korea needs to build social infrastructure such as education that could make Koreans more efficient at work, while 23.4 percent said the government needs to have sufficient conversations with companies when it implements regulations.
Many companies feel burdened by new and revised regulations, according to the survey, with 35.4 percent of the foreign companies citing the expansion of the scope of base salary, which could force them to pay more to employees.
Meanwhile, companies giving a good assessment on Korea cited industrial competitiveness as the biggest reason for their optimism (43.3 percent), followed by qualitative human resources (32.2 percent), proximity to the Chinese market (11.1 percent) and the country’s free trade agreements (6.7 percent).
BY MOON GWANG-LIP [email@example.com]
with the Korea JoongAng Daily
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