Foreign Investment in Korea to Hit $16 Bil. This Year

KOREA TIMES 2000/02/28

By Nho Joon-hun

Staff Reporter

After suffering its financial crisis in 1997, Korea is determined not to go back to the demise and is planning to lure another $16 billion in foreign direct investment this year.

According to the Commerce, Industry and Energy Minister Kim Young-ho, the government is planning to adopt regional strategies to attract foreign investments.

``Every country and their companies have their needs and we will strive to meet those needs by establishing an effective infrastructure for foreign businesses,'' the minister said.

He said the Korean government will be providing investors with a package of incentives and follow-up services so that their investments here bear the optimal fruit.

The former professor said, ``Over the long term, we are looking at the adoption of a comprehensive strategy for attracting foreign investments totaling 20 percent of the GDP in the year 2010.''

Korea has been working overtime since the financial crisis to bring in foreign investments, not just as a means to increase foreign reserves but to introduce advanced technologies.

As a result of these efforts, FDI in Korea has been increasing dramatically over the past two years and achieving this year's goal of bringing in $16 billion will be another milestone.

As part of the measures to woo more foreign investments, MOCIE is planning to compile complaints from organizations such as the American Chamber of Commerce and Industry to apply in government policy.

``We have done many things over the past couple of years to improve the business environment for foreign companies and it is time to make the climate even more sophisticated,'' Kim said.

In addition to activities of the central government through organizations like the Korea Investment Service Center, MOCIE will also be working closely with provincial administrations to increase foreign investments in those regions as well.

On the trade front, Kim said everything is being geared to realize the goal of hitting a trade surplus of $12 billion this year even though the nation has gotten off to a slow start.

``We are basically looking at an expansion in overall trade, both import and export, but the vitality of the export industry should make it possible to realize the surplus of $12 billion,'' he noted.

As part of this plan, MOCIE will aid in transform the current trading format to one that is more integrated where companies are exporting cultural products and services.

At the same time, greater emphasis will be placed on improving industrial design and developing Korea's own brands and trademarks to expand its presence in the international markets.

``More and more, quality is taken for granted and there has to be that additional benefit of buying a Korean product and this will come in categories like industrial design,'' Kim said.

Also important, he said, is the vitalization of e-commerce and cyber- trading, areas which are emerging as the central theme in global trade and areas in which Korean companies must focus more on.

Along this line, MOCIE will be promoting joint research and other activities among companies, universities and research institutes to boost Korea's competitiveness in the global market.

On the energy side, MOCIE will be making concerted efforts to develop alternative sources, which will satisfy 1.4 percent of all demands in the year 2002, up from this year's 1.0 percent.

``The reality is that Korea has to import virtually all of its energy resources and additional research is vital for reducing the dependency at least marginally,'' Minister Kim said.

Concerning the increasing prices of oil, he said Korea will boost its energy- conservation campaign while helping industrial companies overcome their difficulties from the rising prices.

At the same time, Korea will continue to work closely with countries like Saudi Arabia and the United Arab Emirates to ensure the stable supply of oil and liquefied natural gas, the minister said.

He said the government will expand the voluntary agreement (VA), inviting businesses with high energy consumption and large buildings to invest in energy-efficient technology.

Korea will allow ESCOs to do their businesses with collective housing and school facilities while striving to secure the production and demand base for energy-efficient device manufacturers.

On Korea's industrial policy, Kim said the government's strategy to sharpen its industrial competitiveness can be dubbed as ``a carriage and pair'' style growth strategy.

First, as for the industrial structure aspect, Korea plans to develop cutting-edge industry sector including IT and software, while integrating the manufacturing and information industry into a knowledge-based industry. At the same time, it plans to foster venture startups, ensuring economic dynamism.

Second, the government if seeking to maximize the innovative capability of each player by implementing localization and globalization. It will enhance the innovative capability of the industry, academic and public sectors by R&D support measures such as the construction of techno-parks.

Korea will also establish a RIS (Regional Innovation System) by networking major players, and further develop the system into a nationwide innovation system.

Furthermore, the ministry will strive to ensure a global framework and engage in global network by technology exchange and cooperation with other countries.

Moreover, the nation-wide innovation system will be all-encompassing and cooperative with hopes of reachings beyond the industry, academic and public sectors to embrace the general public.

``In other words, the business sector will spearhead restructuring _ centering around R&D, workers and the government alike

_ to serve as the subjects of innovation, while the government creates the necessary environment for the management and labor to work in close cooperation and to serve as an `innovation community,''' Kim said.

In addition, the ministry will actively nurture the core industry as the growth engine in the 21st century in anticipation that the knowledge-based economy will be focused on R&D, information and knowledge-based industries such as IT, biotechnology, superconductors and fiber optics.

jakenho@koreatimes.co.kr