'Take your hands off market'

Amy Jackson, president of the American Chamber of Commerce in Korea

Lack of regulatory transparency tops foreign business concerns

By Lee Hyo-sik

Korea must improve its regulatory transparency, abide by international standards and make its labor market more flexible in order to join the ranks of advanced countries, according to a top official at the U.S. business lobby group here.

In an interview with The Korea Times, Amy Jackson, president of the American Chamber of Commerce in Korea (AMCHAM Korea), urged the Korean government to stop meddling in corporate affairs, and instead help create a fair and predictable marketplace to foster innovation and achieve the continued growth.

“Companies take many factors into account when investing abroad, such as the tax regime, intellectual property rights protection, human resources and foreign-friendly environment,” Jackson said. “ Korea has one of the world’s best well-educated, hard-working labor forces. But it is not so strong in other aspects.”

She pointed out that Korea’s enthusiasm for attracting foreign investments is not steady, saying the country sometimes acts as if it is not interested in drawing capital from overseas.

“The No. 1 complaint among foreign businesses operating here is regulatory uncertainty. The first Korean word I learned was ‘palli palli,’ which means fast. It is good in many ways. I spent a long time in Japan. There, it is difficult to enact change. That’s the weakness of Japan while implementing changes quickly is Korea’s strength,” Jackson said.

However, Korea’s policies sometimes change too quickly without reflecting on the opinions of concerned parties.

“Policies need to be carefully designed allowing for feedback and input from all stakeholders in a transparent manner before being implemented. This process helps the government avoid unintended consequences that can occur when polices are developed without input from all affected parties,” she said. “Deliberative policymaking will ensure the predictable, transparent and consistent marketplace that companies need when they consider investing in new areas.”

The president then called on the Korean government and companies to follow international standards more closely.

“Many Korean firms, including Samsung and Hyundai, have become successful around the world. The nation has assumed more active international roles over the past few years as a member of G20 and a global aid donor,” Jackson said. “In this regard, foreign governments and businesses have high expectations for Korea to abide by international rules.”

However, Asia’s fourth largest economy has its own standards, which is not good for attracting foreign capital and companies.

“Unfortunately, the country has a reputation for changing policies abruptly. This doesn’t help build a predictable marketplace, which is the key to doing business,” she said.

Gov't urged to create fair, predictable marketplace

Korea should create a more open economy in order to attract foreign investments and maintain continued growth, she said.

“The Korean government has a long history of telling industries what to do. This was a key to the nation’s success in the past. However, given accelerating globalization and rapidly changing market environments, the government must take its hands off the market and let it work,” Jackson said.

In order to help Korea’s exporters struggling in global markets due to the yen’s weakness, the government needs to encourage them to become leading innovators in their sectors.

“Korea needs to create an economy that adheres to market-based principles. It should also avoid protectionist policies. For instance, cloud computing is the next big thing. But Korea is one of the first countries trying to regulate it. It should let the marketplace work and not stifle creativity,” Jackson said.

She also said that if Korea continues to open its domestic market to foreign competition and adopt international standards, its industries will be more competitive in global markets.

Rigid labor market deters foreign investments

The rigid labor market and militant unions have been cited as one of the biggest factors discouraging foreign investors and companies from doing business in Korea, according to Jackson.

“Business-friendly labor policy is very important for companies to cope with changes in economic conditions. But Korea’s labor market is rigid and some labor unions are radical. Protesting scenes make headlines around the world. This is how the outside world perceives Korea,” she said.

The labor conflicts at Hanjin Heavy Industries and Ssangyong Motor are both unfortunate events that resulted in much difficulty, she said. “Labor management is one of the issues that foreign companies in Korea have struggled with for many years, sometimes discouraging new investors from coming to Korea.”

Jackson expressed hopes that the Park Geun-hye government will continue to work on improving the country’s labor-management relations based on open dialogue with involved players.

Korea-U.S. FTA benefits consumers

Korean consumers have greatly benefited from the Korea-U.S. Free Trade Agreement (FTA), as a result of lower prices of household goods imported from the world’s largest economy, Jackson said.

“The trade accord has given consumers greater choice of goods at more affordable prices. For instance, Costco lowered prices of juices, nuts and other items imported from the U.S. immediately after the FTA. With the Korean government being concerned about rising inflation, the FTA is having strong positive impacts on consumer prices,” she said.

She also said Korean companies have been benefiting from freer trade with their U.S. counterparts. “Although it has been only a year since the implementation, early signs show that the FTA is, as predicted, benefiting the U.S. and Korean economies, helping to create new export opportunities, economic growth and much-needed jobs. We are already hearing countless business success stories of U.S. and Korean firms, both large and small, that have benefited from the FTA.”

Jackson said she has received many emails and phone calls from American companies interested in operating in Korea. “There has been an upsurge in interests among U.S. companies. Besides the FTA, Korea is definitely a lucrative market because Korean consumers are among the most involved and savvy. It is a test-bed, meaning if businesses satisfy consumers here, they can do the same anywhere in the world. This makes the country attractive for multination firms.”

Growing AMCHAM’s role

Jackson vowed that AMCHAM Korea will continue to support President Park’s emphasis on innovation and research and development because they are crucial for Korea to achieve continued economic growth, create more jobs and foster stronger, more competitive small businesses.

“Since its foundation, AMCHAM has been fulfilling its mission statement of promoting the expansion of the trade and investment partnership between Korea and the United States through active development and promotion of commercial, economic, and cultural exchanges. In order to fully fulfill this mission, we have engaged in many endeavors that are mutually beneficial to both countries,” she said.

AMCHAM has been the first to advocate Korea’s entry into the U.S. Visa Waiver Program, and has worked relentlessly, Jackson said, adding that AMCHAM has long been a vocal supporter of the Korea-U.S. FTA.

“American companies in Korea have been a great force in giving back to the Korean society. In the early years after the war, American companies such as General Electric, Standard Oil and Bechtel Corporation assisted Korea in its efforts to rebuild the nation’s infrastructure. Since then, AMCHAM and U.S. companies have been giving back to the Korean society in creative ways by utilizing their areas of expertise,” she said.

AMCHAM established its charity arm, Partners for the Future Foundation, in 2000 to provide scholarships to university students, medical expenses for youth, and a limited vocational training program for disadvantaged Korean families.

In January, AMCHAM and its members supported the host town program for Special Olympics Team USA to give the athletes a unique opportunity to personally experience Korea before the 2013 Special Olympics World Winter Games begin in PyeongChang.

“With AMCHAM Korea’s 60th anniversary this year, we will be hosting various events to emphasize the close partnership. We have been fortunate to be able to forge between U.S. companies and the Korean government, business community and citizens,” she said.

The organization plans a special AMCHAM 60th anniversary celebration reception on May 14, where it will invite senior private and public sector leaders from both countries to celebrate six decades of successful partnership between American businesses and Korean consumers and businesses.

“AMCHAM has embraced ‘promoting innovation’ as one of its key goals in the coming years to support the growing trend of innovation-based partnerships between U.S. and Korean companies,” Jackson said. “We plan to work with the advisors of the AMCHAM Council on Innovation for the Future to develop new events and provide innovative ideas that help improve Korea’s private and public sectors and enhance opportunities for further collaboration between the Korean and U.S. business communities.”

She also said corporate social responsibility will be one of areas that the council will focus on. “Currently, we are planning an ‘innovation camp’ for students from universities outside of Seoul where CEOs and staff of leading U.S. companies in Korea will meet with local students to provide career consulting and internship opportunities in their companies.