By Choi Kyong-ae
Half of foreign companies doing business here will consider either pulling out of Korea or slashing their investments if the government continues to make unfavorable policies and legislation on their operations, according to a poll released Monday.
In a survey of 201 foreign firms on the business environment, the Korea Chamber of Commerce and Industry (KCCI) found 49.8 percent of the respondents will consider reducing operations here if the government continues to legislate anti-business laws.
"The foreign business community has complained of stricter regulations on materials needed for testing at laboratories or to manufacture products at chemical and electronics companies," Kang Seok-gu, director of the KCCI's corporate policy team, said by telephone.
Among others, they pinpointed a recent court ruling on "normal wages" as growing concern because they may be forced to hand over large amounts in back pay, Kang said.
The survey conducted last month showed 55 percent of respondents rated the investment environment in Korea as "bad" and the remaining 45 percent as generally "good." The survey offered the respondents only two categories to choose from.
Eight out of 10 multinational companies said the attractiveness of Korea's investment environment for foreigners has been little changed or has worsened in the past three years, the poll results said.
The survey comes on the heels of the Park Geun-hye government's stimulus plans unveiled last week to attract foreign investment. The programs were designed to give foreign firms bigger tax benefits and an improved atmosphere against uncertainty if they establish their Asian headquarters and research and development centers here.
Foreign business lobbying groups such as the American Chamber of Commerce in Korea and the European Chamber of Commerce in Korea have pointed to the lack of predictability in economic policies and excessive regulations as major obstacles to investment.
They have also called for greater consultation with the government when rules and regulations are developed or changed to reduce the uncertainty of the business environment.
However, things didn't evolve in favor of their interests last year.
In December, the Supreme Court said regularly-paid bonuses should be included as normal wages, which will push up retirement allowances and other work-related payments for the labor-intensive automobile industry, in particular.
GM Korea, 70 percent-owned by General Motors, has closely watched the wage issue as it may have to pay at least 170 billion won ($160 million) annually in back-pay to its 17,000 workers if the court's ruling is applied to its ongoing lawsuits.
Moreover, the Park government introduced tougher rules to collect more corporate taxes and monitor chemical substances not only for domestic but also for foreign businesses in 2013, the first year of her five-year term that ends in February 2018, Kang said.
The poll noted 53 percent of the respondents expect that rules and regulations recently adopted or under consideration for adoption will likely have a negative impact on efforts to lure foreign capital.
Most of the respondents picked labor-related rules involving the central court's ruling on normal wages and shortened work hours at plants as the biggest worry for their operations going forward, the KCCI said.
Half of foreign companies doing business here will consider either pulling out of Korea or slashing their investments if the government continues to make unfavorable policies and legislation on their operations, according to a poll released Monday.
In a survey of 201 foreign firms on the business environment, the Korea Chamber of Commerce and Industry (KCCI) found 49.8 percent of the respondents will consider reducing operations here if the government continues to legislate anti-business laws.
"The foreign business community has complained of stricter regulations on materials needed for testing at laboratories or to manufacture products at chemical and electronics companies," Kang Seok-gu, director of the KCCI's corporate policy team, said by telephone.
Among others, they pinpointed a recent court ruling on "normal wages" as growing concern because they may be forced to hand over large amounts in back pay, Kang said.
The survey conducted last month showed 55 percent of respondents rated the investment environment in Korea as "bad" and the remaining 45 percent as generally "good." The survey offered the respondents only two categories to choose from.
Eight out of 10 multinational companies said the attractiveness of Korea's investment environment for foreigners has been little changed or has worsened in the past three years, the poll results said.
The survey comes on the heels of the Park Geun-hye government's stimulus plans unveiled last week to attract foreign investment. The programs were designed to give foreign firms bigger tax benefits and an improved atmosphere against uncertainty if they establish their Asian headquarters and research and development centers here.
Foreign business lobbying groups such as the American Chamber of Commerce in Korea and the European Chamber of Commerce in Korea have pointed to the lack of predictability in economic policies and excessive regulations as major obstacles to investment.
They have also called for greater consultation with the government when rules and regulations are developed or changed to reduce the uncertainty of the business environment.
However, things didn't evolve in favor of their interests last year.
In December, the Supreme Court said regularly-paid bonuses should be included as normal wages, which will push up retirement allowances and other work-related payments for the labor-intensive automobile industry, in particular.
GM Korea, 70 percent-owned by General Motors, has closely watched the wage issue as it may have to pay at least 170 billion won ($160 million) annually in back-pay to its 17,000 workers if the court's ruling is applied to its ongoing lawsuits.
Moreover, the Park government introduced tougher rules to collect more corporate taxes and monitor chemical substances not only for domestic but also for foreign businesses in 2013, the first year of her five-year term that ends in February 2018, Kang said.
The poll noted 53 percent of the respondents expect that rules and regulations recently adopted or under consideration for adoption will likely have a negative impact on efforts to lure foreign capital.
Most of the respondents picked labor-related rules involving the central court's ruling on normal wages and shortened work hours at plants as the biggest worry for their operations going forward, the KCCI said.
