|
According to statistics from the Bank of Korea Wednesday, net inflow of foreign direct investment last year was US$3.6 billion, down nearly a half from the previous year. Net foreign capital inflow has declined for two years running since 2004 when it amounted to $9.2 billion.
In contrast, domestic enterprises are investing more and more overseas. Last year, the balance of domestic and foreign investments, tracking the flow of cross-border investment, ran into the red for the first time in four years with a deficit of $3.5 billion. Why are foreign investors turning away from Korea? The answer may lie in a list of grievances filed by foreign companies with the Korea Trade and Investment Promotion Agency (KOTRA).
¡ß Regulations are Unfriendly for Foreign R&D, Logistics
A European liquid cargo freighter complained to KOTRA's grievance management team that it was surprised to find that it could not unload its cargo at night at some Korean ports. Freighters save money when they can unload quickly, but if they arrive at Korean ports in the evening they are forced to wait until morning to do so. An official from the freighter said that all the ports in the other 40 countries to which it calls operate around the clock.
It is also difficult for foreign enterprises to build research and development centers in Korea. Local laws prohibit independent R&D corporations, stipulating that foreign firms must establish their R&D centers as corporate affiliates. Normally R&D centers need just research personnel, but in Korea foreign R&D centers must be set up as stock-holding companies with a representative director or CEO and a board of directors.
A Japanese chemical equipment manufacturer also complained to KOTRA. This company is exempt from custom duties when it imports components and facilities because it has a special high-tech designation. But when it imported substitute items for products that did not fit its facilities, it was levied duties because the substitute components did not come under so-called "Harmonized System Codes."
¡ß Forced to Surrender Drivers Licenses and Buy Medical Insurance
Foreigners who stay in Korea for an extended period are required to obtain Korean driver licenses because international driver licenses are good for only one year. Once they obtain Korean driver licenses, their original licenses are held at the local driving test centers. This can be problematic for businessmen who travel overseas frequently, because they are forced to drop by the driving centers to retrieve their licenses.
Medical insurance regulations are another source of irritation. Regardless of their insurance status back home, foreign businesspeople are required to subscribe to the Korean health insurance plan, meaning some people are forced to pay twice for medical coverage.
¡ß Wages in Seoul are Higher than in Japan
Ozaki Eiji, the president of the Seoul branch of Mitsui, a Japanese trading company, complained to KOTRA's grievance management team about the rising cost of labor in Seoul. "This year, the wages of some employees with college degrees at our Seoul branch outdistanced those of employees at our main office in Japan," he said. Officials from many Japanese companies expressed similar grievances.
The Korean CEO of another Japanese company in Seoul said, "Japanese workers' wages increase an average of one percent a year. But in Korea, wages increase by almost 10 percent a year. The Korean won is still appreciating. This is a real burden on us."
¡ß Safety Rules Written Only in Korean
Foreign companies also faulted Korea's port authorities for neglecting to post safety rules in English. Foreign ship captains sometimes must navigate their vessels into Korean harbors without any English-language guides. When administrative regulations and decrees are revised, they are published in Korean in official gazettes, meaning some foreign companies are forced to hire interpreters to translate the regulations. This compares unfavorably with Singapore where all official documents are written in English.
(englishnews@chosun.com )
|
