By Lee Hyo-sik
Korea is lagging far behind its competitors in attracting foreign investment due to excessive regulations and insufficient administrative support, making Asia's fourth-largest economy an increasingly unfavorable place in which to do business, according to a private think tank, Thursday.
Korea drew $10 billion in foreign direct investment (FDI) in 2014, according to the Korea Economic Research Institute (KERI), which is affiliated with the Federation of Korean Industries.
In a report, the institute said the Netherlands, whose gross domestic product (GDP) is about half of Korea's, was able to attract three times more at $30 billion. Korea's GDP reached $1.41 trillion last year.
Singapore, whose GDP is about one-fourth of Korea's, was able to generate $68 billion in FDI last year, 6.8 times more than the amount of dollars foreign investors pledged to invest here.
The institute pointed out that even though Korea was able to increase foreign investments from 2013 to 2014, it still ranks at the bottom among OCED countries.
It suggested that the government should make a greater effort to ease regulations and extend more administrative support to non-Korean investors and companies if it wants to turn Korea into a business-friendly place for multinational investors.
"Given the size of the Korean economy, attracting $10 billion in FDI is just not enough," said Professor Jung Jin-sup at Chungbuk National University, who authored the KERI report.
"In order to get ahead of Singapore, China, Taiwan and other Asian competitors, Korea should first figure out what foreign investors and companies need to establish a presence here," Jung said. "Policymakers then should lessen regulations restricting corporate activities. They also need to offer extensive administrative help so that foreign investors can get all the help they need in one place and in a prompt manner," the professor said.
The report outlined several instances in which Korea failed to attract foreign investments.
GlaxoSmithKline, a multinational pharmaceutical firm, sought to invest up to $200 million to set up a plant in Hwaseong, Gyeonggi Province, in 2005.
However, the government did not allow the company to do so, citing regulations limiting corporate activities in and outside Seoul.
The drug maker then moved to Singapore and built vaccine production facilities there, employing hundreds of local workers and paying millions of dollars in taxes.
In 2007, U.S. theme park operator Universal Studios wanted to build a park in Hwaseong, but couldn't put the plan into action because it couldn't buy a site from the state-run Korea Water Resources Corp.
The report then cited IKEA's opening of a large-scale store in Gwangmyeong, Gyeonggi Province, as a success story. It said the Swedish furniture maker was able to open a shop thanks to joint efforts by the Korea Investment Promotion Agency and state-run property developer LH, which extended all the support they could.
Korea is lagging far behind its competitors in attracting foreign investment due to excessive regulations and insufficient administrative support, making Asia's fourth-largest economy an increasingly unfavorable place in which to do business, according to a private think tank, Thursday.
Korea drew $10 billion in foreign direct investment (FDI) in 2014, according to the Korea Economic Research Institute (KERI), which is affiliated with the Federation of Korean Industries.
In a report, the institute said the Netherlands, whose gross domestic product (GDP) is about half of Korea's, was able to attract three times more at $30 billion. Korea's GDP reached $1.41 trillion last year.
Singapore, whose GDP is about one-fourth of Korea's, was able to generate $68 billion in FDI last year, 6.8 times more than the amount of dollars foreign investors pledged to invest here.
The institute pointed out that even though Korea was able to increase foreign investments from 2013 to 2014, it still ranks at the bottom among OCED countries.
It suggested that the government should make a greater effort to ease regulations and extend more administrative support to non-Korean investors and companies if it wants to turn Korea into a business-friendly place for multinational investors.
"Given the size of the Korean economy, attracting $10 billion in FDI is just not enough," said Professor Jung Jin-sup at Chungbuk National University, who authored the KERI report.
"In order to get ahead of Singapore, China, Taiwan and other Asian competitors, Korea should first figure out what foreign investors and companies need to establish a presence here," Jung said. "Policymakers then should lessen regulations restricting corporate activities. They also need to offer extensive administrative help so that foreign investors can get all the help they need in one place and in a prompt manner," the professor said.
The report outlined several instances in which Korea failed to attract foreign investments.
GlaxoSmithKline, a multinational pharmaceutical firm, sought to invest up to $200 million to set up a plant in Hwaseong, Gyeonggi Province, in 2005.
However, the government did not allow the company to do so, citing regulations limiting corporate activities in and outside Seoul.
The drug maker then moved to Singapore and built vaccine production facilities there, employing hundreds of local workers and paying millions of dollars in taxes.
In 2007, U.S. theme park operator Universal Studios wanted to build a park in Hwaseong, but couldn't put the plan into action because it couldn't buy a site from the state-run Korea Water Resources Corp.
The report then cited IKEA's opening of a large-scale store in Gwangmyeong, Gyeonggi Province, as a success story. It said the Swedish furniture maker was able to open a shop thanks to joint efforts by the Korea Investment Promotion Agency and state-run property developer LH, which extended all the support they could.
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