Foreign CEOs Reveal Dissatisfaction

CEOs of foreign companies have given valuable advices regarding the Korean economy’s chronic diseases such as the uncertain management of companies, government regulation, and an insecure financial market.

Sponsored by the U.S.-based Asia Society, which researches Asian problems, the “Asia Economy Forum,” which was held at Shilla Hotel in Seoul, pointed out, item-by-item, the obstacles of Korea in attracting foreign investments.

On the other hand, Lee Hun-jae, the deputy prime minister and minister of Finance and Economy, who was invited as a speaker, Kang Chul-kyu, the chief of the Fair Trade Committee, and Lee Jung-jae, the chief of Financial Supervisory Service, have focused on the Korean economy’s growth potential and uplifted the fairness of Korean companies, and solicited for an enthusiastic investment rush to Korea.

Dissatisfaction of Foreign Companies’ CEO—

U.S.-based tobacco company Philip Morris Korea’s CEO, John Gledhill, who addressed his statement as a speaker, remarked, “Korea’s government has introduced many new regulations without an appropriate means of discussion. The uncertainties occurred by this practice of government has interrupted us from investing.”

He added, “Although I have been in Korea for 15 years as a businessman, many people still don’t like us because we are a foreign company, and there are many unfavorable parts existing such as the system of business authorization.”

He also asserted, “At the viewpoint that the most important factor in business is the possibility of prediction, and tax increase should be steadily carried out, the large mark-up of cigarette prices, which is currently being implemented, ought to be thoroughly considered.”

Daniel Carroll, chief of New Bridge Capital and a large stockholder of Jeil Bank, pointed out, “Though the Korean government is driving forward the measure of adopting the system of private-collected funds, it would be hard to succeed without a well-organized capital market. The financial center cannot be accomplished only with a policy.”

The chief of the Korean branch of the U.S. investment company, Warburg Pincus, Hwang Sung-jin, pointed out, “In order to attract foreign investment, the uncertain layer of management executives is more important than the thriving labor unions. The conglomerates’ investments to make their foundation firm are a behavior against the investments. The unpredictable attitude of government is regarded as another obstacle for investment.”

Economy Ministers, Lay Stress on Investment Attraction—

As the first speaker, Lee Hun-jae disclosed the foreigners’ anxieties over the government’s labor and distribution-first policies, saying, “The Korean government’s labor policy is based on the law and principle as its foundation. We will enthusiastically organize the environment for promoting foreign investments such as securing flexibility of the labor market.”

He added, “In order to solve the disproportion of wealth, making more job openings through economic growth will be the best way in the short-term. As for the long-term, providing an equal opportunity of education to expand the range of individual potential to every person is important.”

He also predicted that Korea can achieve five percent economic growth despite three big malefactors such as Chinese flexibility, high oil price, and possibility of the U.S.’ increase of the bank interest rate.

The chief of Fair Trade Committee, Kang Chul-kyu, has announced his attention to reassure the fairness of the companies, remarking, “’Korea Discount,’ which means the underestimation of Korean stocks and companies in overseas stock markets, can be attributed to the distorted ownership structure of a company with geological dangers.”

Lee Jung-jae suggested, “The inflow of foreign capital into our country can promote the competition between the domestic banks, and devote much to the development of financial supervisory policies,” setting forth the theory of usefulness of the foreign capital.

Chi-Young Shin Yong-Ki Kim higgledy@donga.com ykim@donga.com