63% of European firms say biz environment in Korea worsening

More than 60 percent of firms find the business environment here has been deteriorating, with a majority citing the legislative environment and regulations. Gettyimagesbank

By Kim Bo-eun

Over 60 percent of European companies believe doing business in Korea has become more difficult over the last two years due to bureaucratic red tape, a survey by the European Chamber of Commerce in Korea showed Monday.

A total of 127 executives of European companies, representing 47,000 employees at firms ranging from services to manufacturing, took part in the survey conducted in January. The firms have a total turnover of 65 trillion won ($57.5 billion).

Of the total respondents, 63 percent said the business environment here has been deteriorating, with a majority citing the legislative environment and regulations (62 percent) as well as the "discretionary enforcement of regulations" (58 percent) as the major challenges.

Almost half of the businesses also stated that reforms implemented by the government in 2020 did not help their operations. Businesses found the burdens posed by the government's labor policies as challenges in setting up business plans for 2021.

Korea's militant unions, rigid labor market and high corporate tax have consistently been cited as difficulties in conducting business in Korea. Foreign companies have also expressed frustration with the minimum wage hike and limits placed on hiring non-regular workers under the Moon Jae-in administration.

Meanwhile, a law punishing CEOs for major accidents at workplaces was passed in January and will go into effect in 2022.

"The ECCK issues a white paper and the Korean government has done a lot to resolve the challenges we face, but every year the survey results show there is more to be done," a CEO of a member company told The Korea Times.

"The lack of transparency in regulations and policy discrimination against foreign firms are some of the persisting issues," the CEO said.

"Foreign firms have differing processes in importing and selling products, but local regulations do not address these details," another official of a member company said.

"We hope the survey serves as a useful tool for businesspeople and policy makers to make future-forward decisions for the mutual benefit of Korean and European businesses," ECCK President Christoph Heider was quoted as saying in a press release on the survey.

At the same time, 52 percent of the companies surveyed said Korea's strategic importance is growing, compared to 34 percent that felt that way in 2019. Among the respondents, 44 companies reported a high turnover compared to the previous year and 22 percent said they maintained a similar level.

The ECCK is comprised of 360 companies, representing 50,000 employees. Among the firms that participated in the survey, 80 percent have operated businesses here for more than 10 years.