The Korea Economic Research Institute (KERI) held a seminar in Seoul on Oct. 21 on whether South Korea is an attractive investment destination. There, foreign entrepreneurs investing in the country expressed a lot of concerns.
For example, James Kim, chairman of the American Chamber of Commerce in Korea (AMCHAM Korea), mentioned its rigid labor market and unique regulations as hindrances to investment. At the same time, he pointed out the necessity of a flexible application of 52-hour workweek.
“52-hour workweek is practically impossible in the case of investment banks and the Ministry of Employment and labor needs to listen more to the voice of those in the industry,” he said. Christopher Heider, secretary-general of the European Chamber of Commerce in Korea, also said that companies have been given no time to adapt to the change and the South Korean government’s labor policy needs to be more predictable.
When it comes to the recently implemented law for preventing workplace harassment, the AMCHAM Korea chairman said that the maximum penalty stipulated in the law, that is, up to three years in prison and a fine of up to 30 million won, is an excessive risk. “CEOs in South Korea must face the penalty unless they take an appropriate measure whereas only those in charge are punished according to the U.S. law for the same purpose,” he remarked, continuing, “A large number of foreign companies in South Korea are complaining about its high compliance costs and predictability and transparency should be enhanced with regard to various investigations and audits.”
“A 20,000-kilometer driving test must be carried out in order to import a car to South Korea after a 50,000-kilometer driving test in Germany,” the secretary-general explained, pointing out that companies have had to waste their time and money with European test results regarding apparel, cosmetics, pharmaceutical products, and many more not accepted in South Korea.
“France successfully dealt with its notorious lack of labor flexibility and thoroughly overhauled its unemployment benefit structure to dramatically improve its economy,” the secretary-general went on to say, continuing, “What it tackled are systems put into effect in the 1960s and the 1970s, when the annual economic growth rate of Europe was 3 percent to 5 percent, and South Korea's competitiveness cannot be enhanced if it maintains laws and systems applied during its rapid growth in the past.”
In addition, KERI President Kwon Tae-shin pointed out that South Korean companies’ overseas investment is continuing to increase unlike their domestic investment. “Investment in every direction needs to be increased by means of better business environments,” he stressed.