Ombudsman for Vietnam

By Jeffrey I. Kim

I was recently invited to give a keynote speech on “the Korean Foreign Investment Ombudsman System” at an international conference in Vietnam. These days Vietnam is often cited as a rising star in East Asia with its remarkable economic progress. Now the Vietnamese economy is about to launch another take-off with an additional growth engine mounted. The Vietnamese new growth engine refers to the Korea-Vietnam FTA signed by the two trade ministers in May. As a result, Vietnam’s trade and investment will sharply increase and the economic ties between the two countries will be much stronger. As of the end of 2014, Korea is Vietnam’s fourth-largest export partner after the U.S., Japan, and China, while Vietnam’s second-largest import partner after China.

Vietnam’s FDI is as impressive as its exports. As of 2014, the export share of Vietnam’s GDP is about 80 percent and the FDI share of its exports is 68 percent. Among the countries which made investments in Vietnam, Korea ranks at the top with $7.3 billion. Vietnam publicly acknowledges the importance of FDI in promoting exports and GDP growth. With this premise in mind, the Vietnamese scholars and policymakers are very anxious to learn about the successful performance of the Korean Foreign Investment Ombudsman System.

“Ombudsman” may sound a bit strange. It is an indigenous Swedish term. The word, “ombud” means a representative who is authorized to act for someone else. In 1809, Sweden instituted a “parliamentary ombudsman” to safeguard the rights of citizens. It was a supervisory agency independent of the executive branch. A similar system existed in the ancient Roman period. “Tribunes of the people” were instituted in 494 B.C. to protect the interests of the plebeians against the actions of the Senate and the magistrates.

Interestingly, Korea also had an ombudsman system during the Chosun Kingdom of 1392-1910. The ombudsman system then was very unique. The ombudsman was called “amhaeng-eosa” (secret royal inspector). He was directly appointed by the king. When he traveled to local provinces to monitor government officials, he disguised himself to look like a commoner. The appointment and activities of the ombudsmen were kept strictly secret throughout the mission.

In today’s world, however, ombudsman can be more broadly defined. The ombudsman refers to a person who has the right to investigate the public or private complaints and to mediate fair settlements. The official ombudsman is appointed by the government, parliament or the president. The unofficial ombudsman may be appointed by universities, newspaper outlets, NGOs or professional regulatory organizations.

The Foreign Investment Ombudsman System in Korea was instituted in October 1999 in order to resolve grievances of foreign investors and foreign-invested companies, and was established on the basis of Article 15-2 of the Foreign Investment Promotion Act. The Foreign Investment Ombudsman is appointed by the President.

At the present time, about 4,000 foreign-invested companies are being taken care of by 50 staff members who stand by in the ombudsman’s office. Under the leadership of the foreign investment ombudsman, there are three sub-organizations: (1) The administrative supporting office, (2) The investment consulting center where 30 officials from central and local governments provide consultation service and (3) The grievance-resolving body where professional specialists keep close contact and share business information with the foreign investors.

The foreign investment ombudsman and his grievance resolution body collect and analyze information concerning the problems that the foreign investors experience, and request the relevant government agencies to take the corrective measures for foreign investors. According to Korea’s Foreign Investment Promotion Act, the heads of the administrative agencies shall notify the foreign investment ombudsman of the results of handling the grievances in writing within seven days.

Korea’s foreign investment ombudsman system has been operating effectively and built up a high reputation among foreign investors doing business within, as well as outside, Korea. With this reputation, many countries that wish to promote FDI try to benchmark the Korean foreign investment ombudsman system. Vietnam is not alone. Many other countries in East Asia and in Latin America wish to learn how the foreign investment ombudsman system is operated in Korea.

Jeffrey I. Kim is the foreign investment ombudsman, a presidentially appointed troubleshooter for investors and entrepreneurs from overseas. He can be reached through jeffikim@kotra.or.kr.