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[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.