March 10 (UPI) -- In March 2024, the American Chamber of Commerce in Korea surveyed its 800-plus members to ask the best country to place their Asian-Pacific regional head office.
South Korea ranked No. 2, following only Singapore. Over the past year, however, the East Asian nation failed to draw any significant global corporations looking to leave China amid the U.S.-China trade war.
Given this climate, the Seoul administration is urged to ease overly strict regulations to create a competitive environment and make it more appealing to foreign investors.
"Amid the evolving geopolitical landscape, Korea is emerging as an optimal destination for multinational companies seeking to establish their Asia-Pacific headquarters," AMCHAM Chairman James Kim told UPI.
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"Greater regulatory harmonization and improved market access would create a level playing field for both domestic and foreign businesses, making Korea an even more attractive investment destination," he said.
Experts point out that the most problematic regulations are the 52-hour workweek, irregular tax audits, and acts designed to prevent workplace harassment and serious accidents.
For example, the Serious Accidents Punishment Act holds business owners and executives criminally and financially liable for serious workplace accidents, particularly those resulting in death and severe injury.
If a serious accident occurs due to negligence in safety management, the CEO can face imprisonment of up to 30 years along with a maximum fine of $690,000.
It is regarded as one of the strictest corporate safety laws globally. Its broad scope and severe penalties have led to debates about its negative impact on business operations and foreign investment.
"In 2019, our affiliated think tank reviewed 10 laws, including the Fair Trade Act, and found 315 provisions that could subject CEOs to criminal charges," Federation of Korean Industries official You Jung-joo said in a phone interview.
"The situation would not be very different now. The country is required to ease regulations so that foreign businesses and entrepreneurs can select South Korea as their Asian business hub," he said.
The Korea Chamber of Commerce and Industry took issue with the 52-hour workweek, which was implemented in 2018. The system limits regular working hours to 40 hours per week, with a maximum of 12 hours of overtime.
Overtime work requires employee consent and companies with more than five employees should comply with the regulation.
"Foreign companies find it quite burdensome to enter the South Korean market due to strict regulations, including the 52-hour workweek. A more flexible system needs to be introduced," said Executive Director Lee Jong-myoung at KCCI's IndustrialInnovation Division.
Yoo Jang-hee, honorary professor at Ewha Womans University in Seoul, said that South Korea should do something to deal with the militant trade union.
"Foreign businesspeople complain that labor unions are way too strong. They hesitate to tap into South Korea due to fears over strikes," Yoo commented. "The problem is that politicians are seemingly trying to protect unionists even more strongly."
Indeed, the main opposition Democratic Party has been pushing for the Yellow Envelope Act, aimed at protecting workers and labor unions. The act was passed in August 2024 only to face a presidential veto.
It prevents employers from filing excessive damage claims against individual workers or union members for losses caused by strikes or labor disputes.
Unionists welcome the law. But the business fears that it could encourage illegal strikes and disrupt business.
Suh Yong-gu, an economics professor from Sookmyung Women's University in Seoul, noted that South Korea should adopt more policies friendly to business.
"In consideration of labor inflexibility, strong regulations, and complicated visa policies, we can conclude that South Korea is not a business-friendly country. That should be changed immediately to draw overseas investors," Suh stated.
"I strongly recommend the government to come up with bold steps like exempting taxes for five years to multinational corporations, which move its Asian head office to South Korea," he said.
