[Special Interview] AMCHAM chair calls for regulatory reform to bring more headquarters to Seoul
AMCHAM chair calls
for regulatory reform to bring more headquarters to Seoul
BY PARK EUN-JEE
& SARAH CHEA, Korea JoongAng Daily - Korea's potential as a site for
regional headquarters came into the limelight when media outlets like the New
York Times and Washington Post created news hubs in Seoul three years ago. The
shift was attributed to the country's relatively high political and press
freedom, compared to other Asian countries, while China's censorship in Hong
Kong was on the rise. Beijing's increased
scrutiny and existing tensions between the United States and China could
provide Korea an upper hand in the race to bring home global companies' Asia
headquarters, says James Kim, chairman and CEO of the American Chamber of
Commerce in Korea (AMCHAM). “Many global
companies, like Qualcomm and Delta Air Lines, have moved their Asia-Pacific
headquarters to Korea from other options like China, Singapore and Japan,” Kim
said during an interview with the Korea JoongAng Daily. “Leveraging Korea’s
robust infrastructure, skilled workforce and seamless IT integration, there
exists a distinct opportunity for Korea to establish itself as a regional
business hub.” Kim, in early March,
sent President Yoon Suk Yeol a recent report called “Korea as an Asia-Pacific
Regional Headquarters,” calling for regulatory reform. “Korea-U.S.
relations are at an all-time high,” Kim said. “I believe there is more the two
countries can do for future economic cooperation and trade relations, and AMCHAM
will play our role as a bridge builder.” As the largest and
oldest foreign Chamber in Korea, AMCHAM represents more than 800 member
companies and affiliates including Hyundai Motor, LG Energy Solution and SK
hynix, which employ more than 460,000 people in Korea. The Korea JoongAng
Daily sat down with Kim to discuss AMCHAM 's role in relations between Korea
and the United States and what Korea can do more to make it a regional
headquarters in Asia. The first Korean
American to head the organization, Kim is now in his seventh year as AMCHAM
Korea chairman and CEO. He previously served as chief executive official at
Korean units of Yahoo, Microsoft and General Motors. Below is an edited
excerpt from his March 19 interview at AMCHAM Korea’s headquarters in Yeouido,
western Seoul. Q. You sent a report
to President Yoon. Can you elaborate on the details of the report? The report
highlights why Korea is a good option for U.S. companies to pick as an
Asia-Pacific headquarters. Korea has so many chances, and I’ve been telling
Yoon to make a few more small changes, and Korea can be the winner here. In semiconductor
companies like Applied Materials, Korea is already making big bucks. About 25
percent of global revenue comes from Korea, which is why Qualcomm has its
Asia-Pacific headquarters in Korea. EVs- and
batteries-wise, Korea has the infrastructure and people equation, and many
global companies are now willing to work with Korean companies like Hyundai
Motor and LG Energy Solution. My mission is to
make Korea a regional headquarters of U.S. companies so that people who run
business in Korea are physically in Korea to make direct decisions on
investments and resources. Q. There’s an
anticipation that the intensifying United States-China tension may benefit
Korea in terms of attracting foreign investment and regional headquarters. Do
you see that as a realistic scenario? Due to the
geopolitical challenges, some companies have to consider other options than
China. For instance, the New York Times moved its Asia headquarters from Hong
Kong to Korea. They had other options like Singapore, Japan and Australia but
picked Korea. Hosting the regional
headquarters offers significant economic and strategic benefits to the host
country. It attracts foreign direct investment [FDI] from multinational
corporations seeking to establish their regional headquarters, thereby boosting
economic growth and creating employment opportunities. Additionally, hosting
regional headquarters promotes local career advancement as employees gain
access to leadership roles overseeing the entire Asia-Pacific region. In recent years,
Korea has emerged as a contender for Asia-Pacific headquarters, with numerous
prominent multinational corporations, including Qualcomm, General Motors, Delta
Air Lines, Disney, Novelis and the New York Times, recognizing the advantages of
establishing their regional headquarters in the country. Q. What do you think is
Korea’s appeal as a preferred regional headquarters destination in the Asia
Pacific region? Korea is the second
most favored location for regional headquarters, following Singapore, according
to AMCHAM’s Business Survey 2024. More than 80 percent of the AMCHAM partner
companies maintain an optimistic outlook for future investments in Korea. First, the Korean
economy is remarkably resilient. Despite the challenges posed by the Covid-19
pandemic, Korea has emerged stronger as the world’s 10th-largest economy. One
of the main drivers of this growth is the Korean people. With a highly skilled
workforce and a strong culture of innovation and entrepreneurship, Korea has
been able to adapt quickly to maintain its competitive edge. Korea is also a
global leader in innovation, driven by its robust IT infrastructure, talent
pool and commitment to research and development. Based on its leadership in
cutting-edge technologies such as AI, EV batteries, hydrogen, robotics and
semiconductors, Korea has established itself as a powerhouse in the industry. The Korean Wave
craze is once again hitting the world. Korean culture is now in the middle of
the global fad, including K-pop, K-sports and K-food. There is more interest
than ever among U.S. companies to invest in Korea across diverse industries. I am often asked
about the strength of the Korean business environment. I’ve been in Korea for
20 years now. If it wasn’t a great place for global companies to do business, I
would have probably gone back to the United States years ago. Q. While some 5,000
global companies have selected Singapore as their Asia headquarters, Korea is
home to fewer than 100. What do you see as the biggest reason? As I mentioned
previously, it is imperative for Korea to establish the most competitive
business environment when compared to regional counterparts like Singapore,
Japan and Hong Kong. The report
identifies labor flexibility as one of the top four areas of reform needed for
Korea to realize its potential as a regional headquarters. In terms of labor
flexibility, Korea is perceived as having a more rigid system (ranked 97th)
compared to regional peers such as Japan (11th), Hong Kong (19th) and Singapore
(first). The current working
hour policy in Korea imposes more restrictions than its counterparts. Creating
an environment that enables companies to quickly adjust their workforce in
response to evolving market demands will position Korea as an appealing
destination for international businesses. Given Korea’s
strategic importance to the global economy, greater regulatory harmonization
and market access in the Korean market would create a level playing field for
domestic and foreign companies and enable greater innovation and partnerships
between the two countries. Q. How about in more
general sectors? In my opinion, Korea
could significantly enhance expatriate experiences by focusing on
administrative services, particularly related to the immigration process and
financial services. Simplifying and expediting procedures for obtaining
residency permits and work visas would alleviate bureaucratic burdens, enabling
expatriates to settle in more swiftly and focus on their professional roles. Additionally,
enhancing financial services, including expediting bank account setups and
credit card acquisition, would facilitate expatriates' financial transactions
and daily living arrangements. Q. How can the Korean
government further support initiatives to establish regional headquarters, and
how does AMCHAM plan to contribute to these efforts? Foreign investors
experience challenges from Korea’s complicated, opaque and country-specific
regulatory framework. A more favorable regulatory environment that aligns
Korean regulations with global standards is crucial. The Korean
government has taken steps to address regulatory issues over the last decade.
As a result, we have seen incremental improvements in the overall business
environment. In this regard, we appreciate President Yoon’s deregulation
initiative. Notably, in the
previous year, the Korean government successfully implemented two significant
regulatory initiatives including the extension of the flat tax rate for foreign
workers. Under the previous tax system, a foreigner had to pay according to the
normal tax rate like Koreans after living here for five years. This forced them
to move out of Korea, and from a business perspective, juniors replaced the
seats. Korea should help experienced workers to stay in the country to make
more decisions and attract investments. Q. The Fair Trade
Commission's new Platform Competition Promotion Act is the talk of the town.
What direction should the regulation go? We always want to
tell them, “Please do not rush to speak to as many stakeholders as possible.”
The government should be concerned about all the different bodies and make a
fair determination. I mean, all the laws
already exist there. Q. There have been
concerns about the impacts the U.S. election will bring to Korean companies,
especially if Donald Trump wins. What do you make of the ongoing election and
its effect? Right now, people
are just concerned about uncertainties. Korea and the United States have
maintained a positive relationship for more than 70 years, surpassing so many
presidents. When Trump was
president, we still had a very good relationship. He’s a business person. It
will be fine. Q. How have Korea-U.S.
relations contributed to fostering a business environment, and what is AMCHAM’s
role in the ties? I’ve been in Korea
for two decades and the relations between Korea and the United States is at the
best I’ve ever seen. The relationship between presidents Yoon and Biden is also
very good. Trade and
investments between the two countries have reached historic levels. Since 2021,
Korea has emerged as the leading investor in the United States, exceeding the
$100 billion mark. Conversely, the United States secured the top spot as the
largest FDI contributor to Korea last year when Korea had a record-high FDI of
more than $30 billion. By December of last year, the United States had
solidified its status as Korea’s primary export market. The enduring
Korea-U.S. free trade agreement has stood as an economic backbone of the two’s
economic partnership for more than a decade. Ongoing dialogue and FTA
provisions facilitate discussions on potential trade barriers, ensuring a fair
and transparent business environment for U.S. companies operating in Korea. The Indo-Pacific
Economic Framework (IPEF), a U.S.-led regionwide economic engagement
initiative, presents an important opportunity for the Korea-U.S. partnership.
As one of the 14 members actively participating in the negotiations across all
four pillars including trade, and supply chain, Korea holds a key role in this
initiative. We welcome the
upcoming implementation of the IPEF Supply Chain next month, which will enhance
Korea’s economic security in vital strategic industries. Concurrently, we urge
the Korean and U.S. governments to incorporate meaningful deregulatory
initiatives, such as introducing a binding digital economy chapter in the trade
pillar of the IPEF. This step will contribute significantly to positioning
Korea as an innovative hub in the region. Q. What’s AMCHAM 's
major focus for 2024 other than the regional headquarters initiative? At AMCHAM, we are
serious about our mission to help U.S. businesses thrive in Korea and
facilitate greater Korean investments in the U.S. AMCHAM also helps support
smaller firms from Korea and the United States to expand their operations
abroad. As a bridge builder between the United States and Korea, Amcham will
continue to work closely with both governments and partners to deliver on our
mission. Despite ongoing
uncertainties, AMCHAM saw record growth in membership in our 71 years of
history, with many iconic U.S. as well as Korean companies joining the Chamber
or becoming premium members. We have seen a 500 percent increase in premium
members more than the past five years. This shows that global companies see the
appeal of the Korean market, even in a time of pandemic, and recognize the
value of the AMCHAM platform. As we move forward,
we are keen to maintain this positive momentum. One of our key objectives is to
expand the membership base further, broadening the spectrum of perspectives,
expertise and networks within AMCHAM. By welcoming more diverse members, we can
enhance collaboration, knowledge exchange and business synergies, making AMCHAM
an even more robust and influential platform for fostering economic growth and
mutual prosperity. Source:https://koreajoongangdaily.joins.com/news/2024-03-25/business/industry/Amcham-chair-calls-for-regulatory-reform-to-bring-more-headquarters-to-Seoul/2008680
2024.03.26
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