Governor Leads Ongoing Changes to Drive Up Foreign Direct Investments

11-20-2008

By Jane Han
Staff Reporter (Korea Times)

Companies around the world are slashing budgets and rolling back investments, but Gyeonggi Province seems to be riding out the negative cycle with various governor-led efforts to kick its attractiveness up a notch.

Companies around the world are slashing budgets and rolling back investments, but Gyeonggi Province seems to be riding out the negative cycle with various governor-led efforts to kick its attractiveness up a notch.

Helping to reduce risk, build trust and paying continuous attention are crucial, especially during these tough times, says Gyeonggi Provincial Governor Kim Moon-soo, exemplifying cultural differences and labor and legal issues as common initial difficulties for foreign companies.

“Expanding overseas often means starting with a significant amount of uncertainty,” he said in a written interview with The Korea Times. “But expanding when the global economy is in tatters, that’s uncertainty at a whole new level.”

Kim stressed that his province tries hard to be in each investors’ shoes and understand their concerns, so that “even the smallest problem gets attention for improvement.”

So far, these efforts seemed to have paid off.

This year alone, the northwestern province has sealed 21 memorandums of understanding (MOU) with companies in a wide range of industries from auto parts to cell technology. The value of the agreements total up to more than $2.2 billion which are estimated to create 9,900 jobs, according to the provincial data. The most [recent] MOU was with SB LiMotive, a joint-venture by Samsung SDI and Germany’s Bosch to develop rechargable batteries for hybrid electric vehicles.

The amount of foreign direct investment (FDI) which flowed into the province as of the end of October is $1.8 billion, which is already far more than the $765 million in 2007. Gyeonggi Province says it is aiming to reach $2 billion by year-end.

The figures are on the rise, but Kim says it’s too early to be satisfied.

Korea is the only nation among Organization for Economic Cooperation and Development (OECD) countries to have seen a drop in FDI for three consecutive years, he stressed.

In that sense, Gyeonggi Province has demonstrated unique growth, as data indicates that investment tallied until October surpasses last year’s figure by 75 percent.

“Every effort, every persuasion, every improvement we make is slowly reflected in the results,” said Kim, “and that’s what keeps us going.”

The hands-on governor has made four economic development mission trips to the U.S. and Australia this year. He consulted Universal Studios regarding future investment and sealed numerous multi-million dollar MOUs with companies overseas.

Kim says each time he makes a trip overseas, he gets a better idea of what Gyeonggi must do to get an edge over other attractive investment destinations in Asia, such as China and Singapore.

“I honestly felt slightly concerned when I saw the rapid economic development in Shanghai’s new ports because that is our eventual competition,” he said, adding that complacency is dangerous in today’s borderless world.

Even though these other destinations are quickly emerging, Kim highlighted South Korea’s unique benefits over them.

Talented labor force, advanced technology and infrastructure are among the factors he singled out.

“We’re also at the center of action here in Northeast Asia,” he said, citing that the region takes up 18 percent of the global economy and 24 percent of the world population.

The governor also seemed to be aware of drawbacks that need attention. He said comparatively higher production costs and excessive red tape are disadvantages that could be remedied.

“I think it’s the attitude,” says Kim. “Our basic attitude is that we’re there to help immediately.”

The governor said he is well-aware that time is money for companies, and that his staff does what it can do to help companies make speedy judgments and act accordingly.

He said that responding quickly to inquiries and complaints is one of the most important improvements Gyeonggi has made.

“We know that the investment environment is what makes or breaks a deal,” said Kim, “and it’s important for us to communicate with prospective investors.”

To help improve investment conditions, 13.4 billion won has been earmarked, according to the province’s 2009 budget proposal.

“The economy is clearly in a downward turn across the world, but people make up the economy,” said Kim. “We can’t sit idly just because the economy is bad.”

When consumption slows, production rolls back and then employment stalls – it’s a vicious cycle, he explained, urging, however, that individuals and companies need to see the big picture.

“We’ve all heard it, but I can’t stress enough that making decisions based on short-term results is not wise management,” said Kim, adding that there are many global players that aren’t shying away from putting money into more research & development (R&D).

In the case of Gyeonggi, he said FDI actually improved in the third quarter compared to the second quarter.

Kim said there are many who are pessimistic about next year’s economy, but emphasized that having such a defeated expectation will only decrease potential.

“It’s time to team up,” he said, “and I encourage investors to join team Gyeonggi to be winners in the end.”

jhan@koreatimes.co.kr

(Source: Korea Times)

http://www.koreatimes.co.kr/www/news/nation/2008/11/123_34782.html