July 05, 2018 12:52
A growing number of businesses are cutting back on domestic investment and moving their factories overseas.
Overseas investment by Korean businesses accounted for only 10 percent of corporate spending in the early 2000s but now exceeds 30 percent. The trend shows just how much the environment for domestic investment has deteriorated.
A poll by the Chosun Ilbo of chief financial officers at the top 20 business groups shows that 10 of them feel the investment environment in Korea is worse than conditions abroad, and two said it is far worse. The remaining seven said it is similar to other countries' and only one said it is better here.
Asked why the investment environment is bad, many ticked regulations and anti-business sentiment and policies. One CFO said, "Even if we try to invest in a new business, there are too many restrictions. It's extremely tiring to have to meet with endless government officials and implore them to ease regulations."
Another staffer at a big conglomerate said, "When we build production facilities overseas, government officials and local residents are usually extremely welcoming, but in Korea we often face opposition from the public, who are worried about small businesses closing down or real estate prices declining. To be quite frank, I don't have the appetite to invest in Korea."
Four respondents cited militant unions as another off-putting factor. To stimulate investment, 13 said the government needs to make it easier for businesses to lay off workers and pay less tax. Three said red tape has to be reduced, while two urged the government to hold more frequent discussions with them.
One executive with a top conglomerate said, "With business lobbies like the Federation of Korean Industries and Korea Employers Federation unable to raise their voices, there is no longer a channel for companies to voice their concerted opinions to the government."
Government officials are reluctant to meet with conglomerates, made shy by the massive corruption scandal that brought down ex-President Park Geun-hye and exposed intimate collusion between government and big business.
Others complained that the government is not helping them explore new fields of investment that are too big for a single business but need a government-led initiative.
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