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Foreign Firms to Invest More in 2002
01/01/2002

Over half the foreign companies operating in Korea say they will make more new investments next year than they did in 2001, sentiment that is a marked contrast to that of most domestic firms. Foreign businessmen cited government bureaucrats and local executives as the two groups that most discouraged new investment in Korea.

The JoongAng Ilbo Economic Research Institute recently surveyed 77 major foreign companies in Korea in cooperation with the American Chamber of Commerce and the European Union Chamber of Commerce.

About 56 percent of the respondents, 43 companies, said that they will expand their businesses in Korea next year either by increasing investments in existing businesses or by entering new industries. Their confidence seemed to be based on healthy revenues this year and an optimistic business outlook for 2002.

Half the respondents said they forecast Korea's economic growth to reach 3 to 5 percent in 2002. This is in line with the government's pledge to pull up next year's gross domestic product growth by 4 percent.

Although less than half of the firms polled said the investment environment for foreigners in Korea improved in 2001, when asked whether they had experienced discrimination while doing business in Korea, about one third of respondents said "almost never." That is significant progress: four years ago, when Korea opened its door to foreign investors in earnest, most firms answered in various surveys that they were faced with discrimination.

The survey respondents grumbled about Korean government officials, executives, and labor unions. When asked to select the groups that are the biggest barrier to drawing more investment to Korea, almost half of the firms selected government officials, followed by Korean business executives at 17 percent and employees at 14 percent.

About one in three foreign companies said they had received demands from government officials for bribes or kickbacks. Five firms said they acceded to the demands; the rest said they refused.

When questioned about the biggest difficulties of doing business in Korea, foreign firms cited complex administrative regulations and labor relations as the biggest nuisances.

High economic growth (27 percent) was selected as the biggest factor attracting investment to Korea, while healthy domestic demand and highly educated human resources were the next two most chosen responses, at around 20 percent each.


Source by : JoongAng Ilbo (2001. 12. 26)

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