Nine out of 10 foreign companies are undecided on investing in Korea

Nine out of 10 foreign companies in Korea have decided not to invest this year or have not made plans yet.

According to a survey by the Federation of Korean Industries (FKI) on hiring and investment trends of foreign companies in Korea, 27(26.7%) out of 101 foreign companies said that they did not have any investment plans this year. Also 65 (64.4%) of the surveyed companies replied that they have not made plans yet. The survey was carried out based on foreign invested companies with more than 100 employees.

Seven (8.9%) out of nine companies that have determined investment plans will be maintaining levels similar to last year‘s. Only two companies will be increasing their investment.

The leading reason why companies were unable to increase investment was ‘ongoing COVID-19 situation impacting internal/external economic and industry situations,’ which accounted for 44.1%, followed by other reasons including ‘major investment projects already completed’ (26,5%), ‘excessive regulations undermining business environment’ (5.9%), ‘high corporate tax and lack of incentives make investment environment less attractive’ (2.9%).

Meanwhile, most of the foreign companies have not yet come up with hiring plans as well. According to the survey, 14.9% of the surveyed companies replied that they do not have hiring plans, and 46.5% have not established plans yet. Also, 51.3% of the companies that have hiring plans in place said that they are planning to maintain levels similar with last year, rather than increasing hiring (46.2%). A small number (2.5%) said they are planning to reduce hiring.

“The new government should put policy focus on creating favorable business conditions to expand hiring and investment at companies,” said Kim Bong-man, the head of the FKI’s International Division.


Chang-deok Kim drake007@donga.com