US Chamber of Commerce in Korea presents ‘Company Attraction Report’ to President Yonhap
“Companies are ‘turning away from China’… Korea has a golden opportunity to become a global hub”
Korea ranks second after Singapore in Asia-Pacific HQ’s preferred country survey
Excessive regulations such as the Serious Accidents Act and the 52 hour week are obstacles.
“Even if regulations are raised that do not meet global standards, such as irregular tax audits that come out from time to time, a rigid 52-hour work week, and the ‘anti-harassment law in the workplace’ that only bothers CEOs, there is one possibility that global companies will move their Asia-Pacific headquarters to Korea.
It was confirmed that the American Chamber of Commerce in Korea (AMCHAM) recently prepared a report calling for ‘attracting the headquarters of global Asia-Pacific companies to Korea’ and presented it to President Yoon Seok-yeol. This is the first time that AmCham, which acts as a channel to convey the demands of American companies to the Korean government, has prepared a ‘Company Attraction Strategy Report’ and proposed it to the President of Korea. AMCHAM Chairman James Kim met with reporters on the 18th and said, “Korea should not miss the golden opportunity for many global companies to leave China and Hong Kong following the US-China conflict,” and added , “We “If you do that, I will work hard to persuade global companies to set up their Asia-Pacific headquarters in Korea,” he said.
The ‘Report on Korea’s Strategy for Attracting Global Companies to the Asia-Pacific Region’ prepared by AmCham cited excessive regulations that prevent foreign companies from entering Korea, including the 52-hour work week, inspections irregular tax, the law prohibiting harassment in the workplace, and the Serious Accident Penalty Act. The report noted, “Singapore allows up to 72 hours of overtime per month in addition to regular working hours (44 hours per week), but Korea regulates working hours on a weekly basis, which reduces work efficiency.”
AmCham cited the Workplace Bullying Prohibition Act and the Serious Accident Penalty Act as “representative regulations that prevent CEOs from moving to Korea.” Chairman Kim said, “Many foreign CEOs react absurdly to the law that punishes the employer (CEO) while leaving the harasser alone.” The report assessed that there is a high possibility that many global companies will move their Asia-Pacific headquarters to Korea even if regulations that do not meet global standards are reviewed. This is because in a recent survey carried out by AmCham on over 800 member companies, Korea was second in the list of countries where people would like to locate their Asia-Pacific headquarters, following Singapore. Chairman Kim said, “Compared to Singapore, etc., low cost of living, information technology (IT) infrastructure, Korean Wave culture, and educational conditions are considered attractive.”
“If Korea lifts its excessive regulations, it will surpass Singapore in attracting foreign companies.”
‘China Exodus’ is the last chance… “Let’s work together to attract companies from the public and private sectors.”
Apple, Amazon, Google, Microsoft… .
These are American companies that have withdrawn from China or moved their production centers in the last five years. They entered the market because of cheap labor and a rich domestic market, but the conflict between the US and China along with the national priority policy of the Chinese government made it difficult to hold out anymore. James Kim, Chairman of the American Chamber of Commerce in Korea (AMCHAM), said, “Predictability is the key factor that global companies consider most important,” adding, “As the ‘China Exodus’ becomes a reality, inquiries are pouring in from companies looking to move their Asia-Pacific headquarters to Korea “There is,” he said.
That is why AMCHAM published its first report on attracting global companies since its establishment in 1953. Chairman Kim said, “This is the last chance for Korea to become the business hub of Asia, and we cannot sit by and watch. ”
○ “Last chance to come to Korea”
AmCham’s ‘Report on Korea’s Strategy for Attracting Global Companies to the Asia-Pacific Region’ focused on the phenomenon of companies leaving China, which started due to the US-China conflict and the COVID-19 blockade. This is because global companies are leaving China, Korea, Singapore and Japan have emerged as alternatives. AmCham’s analysis is that Korea could be the biggest beneficiary of the ‘China Exodus’ because it is geographically closest to China and has excellent industrial infrastructure such as power and IT. The report analyzed, “By attracting an Asian headquarters, there is a higher possibility that additional investments, such as factories, will be made in that region.”
The report also compared the performance of Singapore and Korea in terms of attracting companies. 5,000 Asia-Pacific companies have headquarters in Singapore, but less than 100 in Korea. This is less than Hong Kong, where many companies have left (around 1,400).
AmCham cited ‘regulation’ as the reason why Korea has difficulty attracting foreign companies despite its excellent infrastructure and living conditions. The report placed the risk of criminal liability for CEOs as the first priority. Regarding the Serious Accident Penalty Act, AmCham said, “It imposes much heavier prison sentences or fines compared to Japan, Hong Kong, and Singapore,” and added, “This is why great CEOs (who will play roles important in the future headquarters) are reluctant to go to Korea.” The report suggested that “liability only needs to be imposed in cases of deliberate participation in criminal activity.”
○ Digital regulations are also a problem
The report also mentioned digital regulations that hinder the development of foreign IT companies. In the ‘Global Cloud Deco System Index’, which shows the degree of cloud-related regulation, Korea was ‘second from the bottom’ with 7.7 points, following China (6.5 points) . This figure is significantly lower than Hong Kong (8.6 points), Japan (8.7 points), and Singapore (8.8 points). The report explained, “In Korea, it’s hard to jump into government-led cloud services unless you have your own data center,” and “This is similar to places like Singapore, where bidding is possible whether you own a data center or not. .”
He explained that low labor flexibility and the 52 hour working week system were also obstacles. AmCham said, “In countries like Singapore, it’s much easier to hire or fire people depending on the management situation than in Korea. In Korea, it is difficult to fire people after hiring them, so it is very difficult to increase or decrease the number of people depending on the management situation.”
The report also included the need to reduce corporate taxes. Currently, Korea’s top corporate tax rate is 24%, which is much higher than Singapore’s 17% and Hong Kong’s 16.5%. Given that Singapore is reducing corporate tax to 5-10% for companies headquartered in Asia, the gap widens further. Thailand and Malaysia also reduce corporate tax by 5 to 10 percentage points for Asian-headquartered companies.
The report explained, “Considering labor costs, rent, regulations, labor conditions, etc., Korea’s investment attractiveness is not high,” and “only Asian-headquartered companies need to be provided with incentives.” The report does not contain only negative content. The fact that many global companies are leaving Singapore, which serves as an Asian hub, is a great opportunity for Korea. Chairman Kim said, “Many of the companies operating in Singapore are having difficulties due to high labor costs and prices,” adding, “Many analyzes say that Singapore is at saturation point.”
Reporters Kim Woo-seop/Kim Hyeong-gyu/Seong Sang-hoon duter@hankyung.com
#Korea #watch #Report #submitted #尹
