NEW YORK — As officials prepare for the second round of talks on the U.S.-Korean Free Trade Agreement, representatives and business leaders of both countries met here last week to discuss investing in South Korea.
“I am bullish on Korea as a country; more than I have ever been,” former U.S. Ambassador Donald Gregg said last week during KWR International’s Korea Investment Forum at the New York Palace Hotel. “The core of the relationship [between the U.S. and South Korea] is now becoming an economic one.”
KWR was host of the event with the Korean Ministry of Commerce, Industry and Energy; Korean Trade-Investment Promotion Agency, and investment firm Invest Korea. Panelists included Sye-Kyun Chung, minister of MOCIE; Yong-Deuk Lee, president of the Federation of Korean Trade Unions, and Tami Overby, president of the American Chamber of Commerce in Korea.
The South Korean government has created initiatives to lure foreign companies to invest by setting up Free Trade Zones, Foreign Investment Zones and Free Economic Zones, Chung said. The Foreign Investment Zones will be designated for sections of an industrial complex. They will be reserved for foreign-owned firms or joint ventures, and units would be leased. All goods entering the Free Trade Zones would be exempt from customs duties and open to foreign-invested companies involved in exports, manufacturing or wholesale trading internationally. The Free Economic Zones are near airports and can include residential and medical facilities.
Manufacturers are eligible to set up offices in one of the foreign investment zones if they have an investment of $30 million or more and if the goal is to build plants and facilities. Investors would have 50-year rent-free leases. They also would be exempt from national taxes for seven years and local taxes for as many as 15 years. These zones are located in several cities, including Geumui, Inju and Cheonan. Only companies that are 100 percent foreign owned or joint ventures would be eligible to move into the Foreign Investment Zones.
Companies investing in South Korea include Federated Department Stores, Christian Dior, Groupe Pinault-Printemps and J.C. Penney. With added free trade and economic zones, more retailers and suppliers are expected to invest in Korea, according to Invest Korea.
Another investment attraction of Korea is its “business-friendly” labor environment. Korea has been known to have a history of labor disputes, but Yong-Deuk Lee and others have worked to foster a good relationship between workers and managers. The union also is supporting foreign direct investment in the country.
Overby encouraged the business community to invest in South Korea, saying that the investment climate has changed in the last 10 years and that “the nomenclature ‘dynamic Korea’ is absolutely true.”
The government is working on becoming more transparent and is adopting global market standards, she said. Although many investors are looking toward China, Overby said, “American companies are profitable and are easily able to repatriate that money, and this is something that my colleagues in China tell me [is] not that easy to do.”