AMCHAM optimistic about resolution of Korea-US dispute over IRA

American Chamber of Commerce in Korea (AMCHAM) Chairman James Kim, third from left, speaks during a press conference at IFC Seoul, Thursday. Courtesy of AMCHAM

US firms in Korea still unsatisfied with labor, tax regulations

By Park Jae-hyuk

The American Chamber of Commerce in Korea (AMCHAM) emphasized that Korea-U.S. relations are at their best, expressing optimism about the possibility of both countries resolving their ongoing dispute over the Inflation Reduction Act (IRA).

“As long as we keep focusing on the long term, I believe there will be a resolution,” AMCHAM Chairman James Kim said during Thursday's press conference to celebrate the 70th anniversary of the organization's foundation. “I remain optimistic both sides will come up with a good understanding and a good resolution.”

Although he acknowledged that the IRA is a “big topic of discussion” and the new U.S. law does provide some challenges, he expected both countries' high-level government officials to find a breakthrough, considering Korea and the U.S. have enjoyed a “very positive relationship.”

“AMCHAM will continue to play a key role in connecting the U.S. and Korean governments and business communities and look forward to working with the Korean government to promote Korea as the best place to do business in Asia Pacific,” Kim said.

The organization representing over 800 member companies pointed out that regulatory reforms are still needed for Korea to be Asia's regional headquarters, defeating Singapore, Tokyo and Hong Kong.

According to the 2023 AMCHAM Business Survey, Korea ranked second for two consecutive years as the most-preferred destination for regional business headquarters in Asia, after Singapore.

In order to boost Korea's competitiveness compared to other regional business hubs, AMCHAM called for reforms in corporate and foreign income tax rates, the labor market, the digital economy, financial services, intellectual property protection and laws punishing CEOs when fatal industrial accidents happen. The organization also asked that the environmental, social and corporate governance (ESG) principles line up with the global standard.

The AMCHAM chairman especially noted that Korea's tax regulations and laws punishing CEOs in case of fatal industrial accidents have made the country less competitive than its rival business hubs.

However, the AMCHAM survey also showed that a larger proportion of businesses view the impact of government policies in 2022 as positive, compared to 2021.

Kim explained that the AMCHAM members are a lot more optimistic about President Yoon Suk Yeol's new administration.

Such an optimistic outlook was also shared by the European companies operating in Korea, who responded to the European Chamber of Commerce in Korea's (ECCK) latest survey as expecting the Korean government to implement meaningful reforms.

According to the ECCK Business Confidence Survey published on the day of AMCHAM's press conference, the expectations improved overall with 19 percent of companies forecasting that the government will implement meaningful reforms ― compared to only 13 percent in 2021 ― and the number of businesses expecting no significant reforms dropping from 44 percent in 2021 to 28 percent.