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| President Park Geun-hye speaks at a meeting of economy-related ministers and civilian experts at Cheong Wa Dae, Wednesday, as they discuss ways to further remove unnecessary and excessive regulations concerning foreign direct investment (FDI) as part of efforts to boost foreign investment and the local economy. / Yonhap |
By Lee Hyo-sik
Foreign business communities here have shown mixed responses to the latest government steps to ease regulations to attract larger investments from outside the country.
Some say that they welcome the government move Wednesday to relax rules concerning capital and human resources, open industries wider to foreign capital and reflect more opinions from non-Korean companies when drawing up policies. They say Korea's corporate environment has steadily improved over the years.
Others, however, say announcing a set of deregulation measures does not solve the problem, adding policymakers should have a strong will to put policies into action.
"The Korean government has set in recent years a highly appreciated policy to attract foreign direct investment (FDI)," said Christoph Heider, secretary general of the European Chamber of Commerce in Korea (ECCK). "The steps now being formed head into the right direction, but considering the challenges Korea is facing, or will face in the future, it seems that those steps are not sufficient."
The Ministry of Trade, Industry and Energy unveiled a host of measures Wednesday to improve Korea's regulatory environment at an economy-related ministers' meeting at Cheong Wa Dae, presided over by President Park Geun-hye.
Trade Minister Yoon Sang-jick said the government seeks to increase FDI to $30 billion in 2017 from $19 billion in 2014, adding that Asia's fourth-largest economy will attract more than $20 billion this year.
The government said it will relax rules governing capital and human resources, which foreign companies have to abide by when investing in Korea.
Among others, foreigners will be allowed to hold a majority stake on maintenance, repair and operations (MRO) firms catering to airlines. Non-Koreans will also be permitted to hire more foreign workers.
The government said it will simplify customs procedures to help foreign firms bring in raw materials and ship finished goods abroad, while opening the door wider for foreign companies seeking to invest in cosmetics, pharmaceutical and food industries.
The government also plans to hold more talks with foreign business communities to reflect their opinions on policies, and help them deal with labor-and environment-related issues.
"Foreign businesses expect a fair and open business environment in which they can operate and strive for further growth. Thus regulations should guarantee a certain freedom to operate. This includes, among others, freedom to determine selling prices or hiring of employees," Heider said. "The regulation that the number of non-Korean workers cannot exceed 20 percent of Korean employees should be abolished. In case a company needs more foreign workers, there should be no restriction."
He then urged the government to focus on strategic needs and trends to form an open and free business environment, stressing business activities should be regulated to safeguard consumer protection, but should not be overregulated.
Barbara Zollmann, secretary general of the Korean-German Chamber of Commerce and Industry (KGCCI), echoed Heider's views, saying that Korea should create a predictable legal environment if it wants more foreign companies to operate here.
"Enough head-time should be given to companies when regulations or laws change so that they can prepare for the changes. Also, labor laws should balance protection of workers and hiring flexibility for companies," Zollmann said. "Korean politicians should have a mindset that the success of foreign companies, once they are invested in Korea, is not to the disadvantage of the Korean people, but that foreign firms provide jobs and income to Korean families."
An executive at a U.S. headquartered materials firm, who declined to be named, said the government must listen to foreign business communities.
"Many companies here have raised objections to a number of regulations concerning environment and labor. But policymakers have turned a deaf ear to them," the executive said. "For instance, the carbon dioxide emission trading system has placed a heavy burden on manufacturing firms because they have to pay hundreds of millions of dollars in penalties in order to emit greenhouse gases. Despite opposition from business communities, the government put the controversial scheme in place anyway, making the country less attractive."
She said Korea has become a less attractive country in the eye of foreign investors because of higher wages, increasingly uneasy labor-management relations and tightening environment regulations.
"But I highly praise the government's latest effort to boost communication with foreign businesses. Foreign business communities will keep an eye on whether policymakers keep their promises or not," the executive said.
