By Jane Han
Staff Reporter

Foreign investors were excited early this year, optimistic that President Lee Myung-bak would present radical deregulation plans to accommodate their needs. Even his special economic advisor Sakong Il fanned these expectations by promising one of the largest foreign business groups here that they'll see changes. But nearly a half a year later, what's left are disappointed foreigners getting ready to channel money elsewhere.

The Korea Chamber of Commerce and Industry (KCCI), a local business lobby, asked 845 foreign firms about their investment plans for the second half of this year, and only three out of 10 said they were willing to put money in Korea. The rest said they had decided to opt out for alternative destinations such as Singapore and Hong Kong.

The main reason for their exit was the gloomy outlook on investment conditions due to unfavorable foreign currency rates, soaring inflation, unstable labor and insufficient government countermeasures.

``It seems like a lot of promises were made at first, but the presidential office is tied up with other urgent tasks,'' said an executive of a U.S.-based office supply company.

Another manager of an Australian food company said, ``A significant number of potential investors were waiting to see plans materialize, but progress is coming much slower than expected.''

Deregulation and tax breaks were the most urgently demanded measures, as polls showed that Korea was ranked the lowest in terms of incentives, administrative procedures, and transparent and consistent policies.

According to the poll, Seoul got 2.89 points in the overall evaluation, while Singapore got the highest of 3.60 points, followed by Hong Kong (3.51), the U.S. (3.46) and Japan (3.25).

Sakong had said his committee of national competitiveness would pass numerous bills at once to lift unpractical policies slowing investment, but such plans were pushed to the back burner as the government spent the past few months battling protests against U.S. beef imports.

The Organization for Economic Cooperation and Development (OECD) said last week that South Korea's foreign direct investment (FDI) ranking nose-dived to 28th in 2007 down from 16th in 2004.

jhan@koreatimes.co.kr