52% of Foreign Companies Say "Foreign Investment Environment Has Not Improved Under Current Government"

[Asia Economy Reporter Changhwan Lee] More than half of foreign-invested companies evaluated that the foreign investment environment and system have not improved under the current government.

On the 18th, the Korea Employers Federation announced that this was the result of a '2021 Survey on Regulatory Awareness and Difficulties of Foreign-Invested Companies' conducted on 220 foreign-invested companies with 50 or more employees nationwide.

The survey showed that 52.3% responded that the foreign investment environment and system under the current government had 'not improved,' which was 10 percentage points (p) higher than the 42.3% who said it had 'improved.'

Among the newly established or strengthened systems under the current government, the most burdensome regulation and difficulty for foreign-invested companies with 300 or more employees was the 'Establishment of the Serious Accident Punishment Act' (29.2%), while for those with fewer than 300 employees, it was the 'Minimum Wage Increase' (45.2%).

The Serious Accident Punishment Act is scheduled to be enforced in January next year (for companies with fewer than 50 employees, enforcement will begin in January 2024), and the minimum wage has increased by 34.8% over four years (2018?2021) since the current government took office.

One out of four foreign-invested companies (27.7%) answered that there are 'Korea-specific risks' when doing business in Korea. The risk factors (multiple responses allowed) cited were 'excessive issuance of unclear legislative regulations' (31.1%) and 'inconsistent and unpredictable administrative regulations' (27.9%).

Regarding regulatory areas in Korea that need improvement compared to other countries to revitalize foreign investment, 'labor regulations' (51.4%) ranked highest (multiple responses allowed). This was followed by 'environmental regulations' (42.7%), 'safety and health regulations' (40.0%), 'fair trade regulations' (28.6%), and 'governance regulations' (18.2%).

Foreign-invested companies selected the most necessary labor-related improvements as 'relaxation of working hours regulations' (48.6%), 'relaxation of wage rigidity' (37.3%), and 'allowing dispatch work for production tasks' (23.6%).

In addition, more than half of foreign-invested companies expected the business environment next year to be similar to this year, and 8 out of 10 foreign-invested companies responded that they plan to 'maintain their current business scale' going forward.

Ryu Kijeong, Executive Director of the Korea Employers Federation, emphasized, "Foreign-invested companies most frequently pointed out 'labor regulations' as the regulatory area needing improvement compared to other countries," and added, "Labor reform is urgently needed to revitalize foreign investment, which can bring warmth to employment and growth in our economy."

This content was produced with the assistance of AI translation services.