A majority of foreign companies and investors in South Korea feel generally dissatisfied with the business environment in the country, particularly with labour policies, a lack of local experts for research and development (R&D) and language barriers, a report from the Korea Trade-Investment Promotion Agency (Kotra) said on Wednesday.
Only 26.7 per cent of foreign companies were “satisfied” with the business environment, the rest answering either “moderate” or “unsatisfied”, the report said.
The percentage of foreign companies content with the business environment was lower than the 2017 survey of 27.3 per cent and 20.8 percentage points less than the same survey conducted in 2013. Kotra surveyed 345 executives of foreign-invested companies in South Korea this year.
Satisfactory levels in categories of labour policies and environment for R&D and innovation were the lowest at 18.3 per cent each. Those who were satisfied with intellectual property protection, tax, regulation and administration processes were under 30 per cent, it said.
Meanwhile, the percentage of foreign investors satisfied with South Korea’s business environment in terms of location, efficiency in logistics and advancement of financial market were relatively high with 43.2 per cent, 35.7 per cent and 31.7 per cent, respectively.
High labour costs, manpower shortages and militant labour were cited as major hurdles in doing business in South Korea, as well as lack of experts for R&D projects.
Only 18.8 per cent of respondents said they would expand investment in the country, 2.4 percentage points lower than the same survey two years ago, while 11.9 per cent of respondents said they would cut back their budget, 2.9 percentage points higher than in the 2017 report.
When asked of reasons for downsizing investment in South Korea, 41.5 per cent of respondents cited dwindling domestic market size and worsening performance.
They also pointed to a language barrier as an obstacle in doing business and wanted to see improvements in visa issuance and immigration services, saying the country has strict conditions for acquiring and extending visas.
THE KOREA HERALD/ASIA NEWS NETWORK