South Korea: Foreign businesses on the fence over S. Korea's future

The foreign business community hoped for better days under a new government in South Korea, but expressed lingering doubts over the next, citing the bleak external market conditions.
“The good thing about having elected Park Geun-hye as president is that the risk factors, such as exactly how much change would be delivered to the corporate sector, has been pretty much eliminated,” said source in the foreign industry who wished to remain anonymous.

“However, because the overseas economies, such as the U.S., China and Europe are far from recovered, it's hard to tell how much the Korean economy can improve,” he said.

Whether and how Park would be implementing her pledges on economic democratization was another area of interest for the foreign community, but not as much as for the local companies.

“We already are sticking to the world standards for trading with our vendors, so we really don't see any of these pledges actually concerning us,” said another executive, as well choosing to remain anonymous.

He added that Park's pledges had only a handful that concerned the foreign sector, and even those were mostly vague ideas that touched on commonly discussed issues, such as additional tax returns for foreign investors.

Others said that while Park was the safer choice considering that the market could not stand any additional drastic changes at this point — given its underperformance — they were not certain as to how much of President Lee Myung-bak's policies the president-elect would be willing to follow.

“Despite that Park as well hails from the conservative platform, as President Lee did, there is the possibility that her policies will differ greatly from Lee, mostly because of the calls from society to address the widening rift between different interest groups or companies,” said another industry observer.

Park Geun-hye of the ruling Saenuri Party, is scheduled to take the oath of office in February, but until then Park will be forming a transitional committee to prepare for her presidency.

Some of the policies that would certainly be succeeded include free trade agreements.

Unlike the Democratic United Party, which had vowed to achieve renegotiations with Washington on the FTA between the allies signed under late president Roh Moo-hyun, the conservative party hopes to keep things as they are, not only for the sake of allied relations, but to avoid having the corporate sector second-guessing what would happen on the FTA.

Mindful of such issues, the American Chamber of Commerce in Korea issued a statement on Park's election saying, “the successful implementation of the KORUS FTA in March this year has already led to a significant rise in Korean exports from a lot of sectors to the United States and added a 'third pillar' to our already strong relationship.”

Meanwhile, the European Chamber of Commerce in Korea hinted that there is additional Park could do for the community as president, saying that the “the European business community often wants to understand additional clearly the regulatory environment in Korea inclunding see additional predictability for regulations.”

It added that the “improvement of communication between Korea's government agencies and foreign industries” is as well of importance.

On the whole, the foreign companies were tight-lipped about discussing the incoming president prior to her official inauguration. The sector had recently witnessed layoffs and branch reductions on account of their underperforming home markets and appeared cautious about making further forecasts on how they would fare in South Korea.