Korea Falls to Third in Asia-Pacific RHQ Preference...AMCHAM Cites "Regulatory and Labor Structural Constraints"

The American Chamber of Commerce in Korea (AMCHAM) revealed that, according to the "2026 Domestic Business Environment Survey," Korea's preference as a regional headquarters (RHQ) location in the Asia-Pacific region fell to third place. While Korea had consistently maintained second place after Singapore, this year’s survey showed it dropping a rank, trailing behind Hong Kong.

On April 15, AMCHAM announced that the 2026 survey results confirmed that global companies view Korea as a stable market; however, structural constraints, particularly those related to regulations and labor systems, are perceived as limiting competitiveness. The organization analyzed that amid intensifying competition to attract regional headquarters within the region, these factors are influencing Korea’s position.

The overall assessment of the business environment remained relatively positive, with a net positive response rate of 23.4%. However, companies’ investment and employment strategies appeared conservative. Specifically, 46.9% of respondent companies stated they plan to maintain their current investment levels, and more than 60% said they would keep employment steady. This suggests a strengthening of stability-focused management amid ongoing uncertainties both domestically and internationally.

The regulatory environment continues to be a significant burden. A total of 68.8% of respondents rated Korea's regulatory environment as "restrictive" or "very restrictive." This indicates that current regulatory conditions are a considerable constraint on business activities and are weakening Korea's competitiveness in attracting regional headquarters.

In the evaluation of regional headquarters location competitiveness, Korea ranked third with 11.8%. The gap with Singapore (58.8%) and Hong Kong (17.6%) was also notable. This demonstrates that Korea’s investment and business environment competitiveness is evaluated as relatively lower compared to major Asian competitors.

The main constraints to attracting regional headquarters were identified as: ▲ labor policy and labor market flexibility (71%), and ▲ regulations that are not aligned with global standards (61%). Additionally, legal risks for management and regulatory uncertainty were cited as burdensome factors. These issues have been found to impact not only short-term investment decisions but also the overall mid- to long-term strategies of companies.

American Chamber of Commerce in Korea (AMCHAM)

원본보기 아이콘

Such constraints are also present in future industries, including artificial intelligence (AI). Respondent companies pointed out the need to improve systems related to data utilization, cross-border data transfer, clarity in AI regulations and governance, access to cloud infrastructure, and the securing of AI talent.

There were mixed assessments regarding Korea’s readiness for inclusion in the MSCI Developed Markets Index. While 36% of respondents said "Korea is ready or progressing smoothly," 39% answered "partially prepared," and 25% responded "not ready or not applicable."

Responding companies suggested the following improvement tasks: ▲ enhancing the transparency, consistency, and predictability of regulations; ▲ strengthening alignment with global standards; and ▲ ensuring fair and open market access for foreign companies.

James Kim, Chairman and CEO of AMCHAM, stated, “It is disappointing that Korea has dropped to third place in RHQ preference, but at the same time, this is a clear signal for the need to strengthen competitiveness. Korea is still a market with stability and growth potential, and if structural issues such as regulatory predictability and labor market flexibility are improved, a rebound is entirely possible.”

He added, “As global competition to attract multinational companies intensifies, now is the crucial time to implement substantial institutional improvements in line with international standards. AMCHAM will continue close discussions with key stakeholders and will consistently present concrete policy recommendations.” AMCHAM plans to release its annual "Domestic Business Environment Insight Report" at the end of this month.

Going forward, AMCHAM will strengthen cooperation with the government and industry, continue policy discussions, and support institutional improvements to enhance the competitiveness of attracting regional headquarters, advance as a financial hub, and foster an innovative ecosystem. In addition, on April 21, it will hold the "2026 Domestic Business Environment Seminar" to discuss ways to improve the regulatory environment and promote investment, based on the results of this survey.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.