Tax certainty, labor reform, better IP protection will help Korea become Asia's business hub: AMCHAM

 

By Lee Kyung-min, The Korea Times - Greater policy certainty in corporate taxes, flexibility in the labor market and enhanced intellectual property (IP) rights are needed for Korea to become a regional business hub in Asia, according to the American Chamber of Commerce in Korea (AMCHAM Korea), Wednesday.

The relocation of regional headquarters of global firms to Korea in that sense is about more than greater job opportunities here, according to the group representing the interests of U.S. firms operating in Korea. Rather, the objective is more about having senior executive positions with key decision-making authority, as well as about more effective supply chain management and increased trade flows through Korea.

The above benefits illustrate the critical importance and the significant economic ramifications of establishing Korea as a regional headquarters in business, the association said.

The challenges represent a transformational change for Korea, which the AMCHAM members welcome as an opportunity to work closely with the Korean government to execute, as underpinned by the policy backing of the Yoon Suk Yeol administration.

"Making Korea a regional hub in Asia is about the centralization of key entrepreneurial and value-creating business activities in Korea," Henry An, chairman of the AMCHAM Board of Governors and senior partner at Samil PricewaterhouseCoopers, said during the fifth AMCHAM Doing Business in Korea Seminar 2023 at the Grand Hyatt Seoul.

Among the attendees were distinguished guests, including officials of the U.S. and Korean governments and representatives from domestic and foreign firms.

The theme of Wednesday's seminar was "Mapping the Path to Success: The Case for Making Korea a Regional Hub."

The AMCHAM board chairman said it would be helpful to foster an environment of greater tax certainty, and added that Korea ranks much lower than other regional hubs when measured by labor market flexibility.

"Providing organizations with greater flexibility in their ability to recruit and downsize as well as manage work hours would greatly improve the overall business environment in Korea," An said during a session.

The Korean government, he added, should deregulate privacy and data-related policies to facilitate seamless cross-border data flows which in his view is key to advancing the digital economy. Unlike Japan, Singapore and Hong Kong, Korea continues to mandate data localization, an area in need of policy improvement, he added.

For financial services, further financial regulatory reform is needed for Korea to follow global standards.

There are higher CEO risks compared to other regional hubs, as Korea's level of punishment for CEOs is significantly severe.

"We believe it will be beneficial and more effective to reduce the scope of CEOs' criminal liability by shifting the focus from punishment to prevention," he said.

The government should improve the enforcement of IP rights which he views as key.

As for environmental, social and corporate governance (ESG) considerations, An asked the government to revise its stance on renewable energy accessibility, women's economic empowerment and corporate disclosure requirements to better maintain consistency with global sustainable goal standards.

"Addressing all of these asks will represent no small feat for the Korean governments," he said. "But demonstrating progress would go a long way in attracting the world's leading multinational organizations to Korea."

AMCHAM CEO James Kim said, "With the upcoming U.S.-Korea summit in April, Korea has a lot at stake in establishing itself as a true global leader. AMCHAM fully endorses President Yoon Suk Yeol's vision to turn the Korean economy into a digital powerhouse that drives innovation and cutting-edge technologies."

Minister of Trade, Industry and Energy Lee Chang-yang said the global trade environment is evolving rapidly, as all countries are devoting their resources into revamping their high-tech industrial supply chains.

"The U.S.-Korea bilateral economic alliance must be stronger than ever," Lee said. "The U.S. and Korea have been working to promote common core values and are the best collaborative partners for fostering high-tech industries and driving supply chain management."

Source: https://koreatimes.co.kr/www/tech/2023/03/419_348057.html?da 

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