ΆΓ  Foreign-invested firms upbeat about economy   

Korea Herald 2001.1.9

Over half of the foreign-invested firms in Korea have a rosy outlook for the Korean economy over the next two years, despite some forecasts of an economic crisis this year, a government report said yesterday.

According to the state-run Korea Trade-Investment Promotion Agency's poll of 2,000 foreign-invested companies in Korea, 53 percent expressed optimistic views about Korea's economic circumstances over the next two years.

The majority of foreign investors also said they would expand investments in Korea over the next two years, citing the growing merits of the nation's domestic consumption market.

However they stressed that speedier reforms in the financial sector and corporate transparency are among the most urgent tasks needing completion for the nation to attain sustainable economic growth and become a greater magnet for overseas investors.

In the survey conducted by the KOTRA's Office of the Investment Ombudsman between Dec. 1 and Dec. 15, 39 percent said that they are "very" sanguine about the outlook for the Korean economy, with another 14 percent voicing optimism. Only 28.2 percent issued dismal economic forecasts, while the remaining 18.6 percent said that economic circumstances will remain unchanged over the next two years.

Asked to pick the areas most in need of attention, 26.5 percent expressed concerns about the slow pace of financial restructuring, followed by a lack of corporate transparency (25.4 percent), delayed improvement in corporate governance structures (16.9 percent), political instability (15.5 percent), inflexible labor market (9.1 percent) and insufficient infrastructures (5.2 percent).

Asked about the most urgent tasks facing Korean enterprises, 26.1 percent mentioned managerial transparency, followed by technology development (17.5 percent), governance structure improvements (16.1 percent), business ethics (14.9 percent) and management know how (10.8 percent).

In a sign of steady profit growths among foreign firms in Korea, 78.6 percent reported bottom-line growth for fiscal 200l, while 87.3 percent forecast higher profits for fiscal 2001. Only 21.4 percent complained of a year-on-year drop in profitability last year.

On investments, 52.3 percent revealed expansion plans over the next two years, with 29.6 percent of them vowing to make drastic increases. About 39.1 percent said that they will maintain their current investment levels, while a mere 8.7 percent had plans to cut investments.

Asked to evaluate the nation's market potential, 36.4 percent expressed satisfaction with the domestic market, while 18.7 percent were satisfied with the labor costs and other direct expenses. The foreign-invested businesses said that the local business environment has improved in the areas of customs and plant establishment, but had made little progress in terms of labor and taxes.

They also pointed out that corruption deeply rooted in the Korean business culture has yet to be eliminated, despite the latest progress in terms of deregulation, communications and government administration. Meanwhile, half of the survey respondents complained that they have recently experiences business-related difficulties in Korea, whereas the other half reported no difficulties. By Yoo Cheong-mo Staff reporter