By Choi Kyong-ae
Experts and business leaders in Korea are sharply divided over the results of a recent World Bank survey on the business environment in 189 countries.
In the "Doing Business 2014" report, Korea advanced this year by one notch to rank seventh compared to a year earlier, with Singapore, Hong Kong and New Zealand snapping the top three spots, according to the competitiveness survey.
The annual report analyzes and compares business environments and regulations for small and medium-size enterprises (SMEs), and so is different from surveys based on interviews and numbers, said Jung Mino at the business environment division of the Ministry of Strategy and Finance in a phone call on Tuesday.
"Cost, procedure and time are three major measurements used to analyze business conditions in each country under the World Bank survey," said Jung. "Large conglomerates are excluded in the survey because they compete with global players outside of a country."
But corporate executives, domestic and foreign, took a different view on the results.
Some said the survey is mainly based on data and figures offered by related organizations in each country and does not fully reflect what's happening in markets around the world. Others said the results show the government's effort to improve business environment for SMEs is paying off.
"The needs of small businesses and the needs of large foreign businesses are completely different, and what matters very much to one group may not matter at all to the other group," Advanced Capital Partners Chairman James Rooney told The Korea Times in an email interview.
And the needs of small foreign businesses are very different again to the needs of large foreign businesses, Rooney said.
"The conditions in Korea for small foreign businesses have gotten more difficult over the years. It used to require a 50 million won ($47,000) equity investment for a foreign investor to form a business entity in Korea ten years ago, compared to zero in most international jurisdictions. It now requires twice or more than that amount," he said. "This severely inhibits the formation of new businesses in a way that does not exist in Hong Kong or anywhere else."
Young Soo-gil, visiting professor of the Korea Development Institute School of Public Policy & Management, said the survey didn't contain complaints of SMEs which still suffer from an unfair playing field compared to large conglomerates in many aspects despite increased support from the government.
Still, Paola Bellusci, trade commissioner at the Italian Trade Commission's Seoul Office, said the business environment for SMEs has improved a lot.
There are "a substantial number of requests from Italian SMEs willing to approach this market, to increase their business with Korea and to make their presence here more stable," said Bellusci. "This means that the business environment is positive … I can feel a growing interest from Italian SMEs, which represent the largest part of our industrial system."
Jean-Christophe DARBES, president & CEO of Cardif Life Insurance, said the current government seems to be doing its utmost to support SMEs in Asia's fourth-biggest economy dominated by a few big conglomerates such as Samsung Electronics and Hyundai Motor Group. The results tell the efforts, he said.
Again, Rooney pointed out Korea has an extra mile to go to offer a level playing field not only to big companies but also to SMEs.
"Instead of nurturing and supporting small businesses and helping them grow into big businesses of the future, all the policy attention and capital continues to be directed towards the big companies - who often waste that capital and cheat on those policy intentions and regulations," he said.
He urged President Park Geun-hye to put new energy and attention into stimulating, supporting, and promoting new and existing small businesses as the core source of new job creation.
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In the "Doing Business 2014" report, Korea advanced this year by one notch to rank seventh compared to a year earlier, with Singapore, Hong Kong and New Zealand snapping the top three spots, according to the competitiveness survey.
The annual report analyzes and compares business environments and regulations for small and medium-size enterprises (SMEs), and so is different from surveys based on interviews and numbers, said Jung Mino at the business environment division of the Ministry of Strategy and Finance in a phone call on Tuesday.
"Cost, procedure and time are three major measurements used to analyze business conditions in each country under the World Bank survey," said Jung. "Large conglomerates are excluded in the survey because they compete with global players outside of a country."
But corporate executives, domestic and foreign, took a different view on the results.
Some said the survey is mainly based on data and figures offered by related organizations in each country and does not fully reflect what's happening in markets around the world. Others said the results show the government's effort to improve business environment for SMEs is paying off.
"The needs of small businesses and the needs of large foreign businesses are completely different, and what matters very much to one group may not matter at all to the other group," Advanced Capital Partners Chairman James Rooney told The Korea Times in an email interview.
And the needs of small foreign businesses are very different again to the needs of large foreign businesses, Rooney said.
"The conditions in Korea for small foreign businesses have gotten more difficult over the years. It used to require a 50 million won ($47,000) equity investment for a foreign investor to form a business entity in Korea ten years ago, compared to zero in most international jurisdictions. It now requires twice or more than that amount," he said. "This severely inhibits the formation of new businesses in a way that does not exist in Hong Kong or anywhere else."
Young Soo-gil, visiting professor of the Korea Development Institute School of Public Policy & Management, said the survey didn't contain complaints of SMEs which still suffer from an unfair playing field compared to large conglomerates in many aspects despite increased support from the government.
Still, Paola Bellusci, trade commissioner at the Italian Trade Commission's Seoul Office, said the business environment for SMEs has improved a lot.
There are "a substantial number of requests from Italian SMEs willing to approach this market, to increase their business with Korea and to make their presence here more stable," said Bellusci. "This means that the business environment is positive … I can feel a growing interest from Italian SMEs, which represent the largest part of our industrial system."
Jean-Christophe DARBES, president & CEO of Cardif Life Insurance, said the current government seems to be doing its utmost to support SMEs in Asia's fourth-biggest economy dominated by a few big conglomerates such as Samsung Electronics and Hyundai Motor Group. The results tell the efforts, he said.
Again, Rooney pointed out Korea has an extra mile to go to offer a level playing field not only to big companies but also to SMEs.
"Instead of nurturing and supporting small businesses and helping them grow into big businesses of the future, all the policy attention and capital continues to be directed towards the big companies - who often waste that capital and cheat on those policy intentions and regulations," he said.
He urged President Park Geun-hye to put new energy and attention into stimulating, supporting, and promoting new and existing small businesses as the core source of new job creation.
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