Presentation on theme: "2004 AMCHAM KOREA DOORKNOCK PROGRAM AMCHAM Korea Doorknock 2004 Washington D.C. New York City."— Presentation transcript:
2004 AMCHAM KOREA DOORKNOCK PROGRAM AMCHAM Korea Doorknock 2004 Washington D.C. New York City
AMCHAM Korea Doorknock 2004 2 Basic Facts on Korea Republic of Korea Russia Seoul Tokyo Osaka Taipei Shanghai Beijing Japan China GDP: Almost $500 Billion GDP Growth Rate 2003: 3.1% Population: 47.6 Million & 25 Million in Greater Seoul Political System: Strong Democracy Religion: Christianity; Buddhism GDP: Almost $500 Billion GDP Growth Rate 2003: 3.1% Population: 47.6 Million & 25 Million in Greater Seoul Political System: Strong Democracy Religion: Christianity; Buddhism Major Statistics Korea is located between China and Japan, two of the world’s largest economies.
AMCHAM Korea Doorknock 2004 3 2002 U.S US Exports to Korea in Million$ (Rank)
AMCHAM Korea Doorknock 2004 4 Korea is a key trade partner and dependable strategic ally for the US Key Facts 12 th largest economy in the world @ almost $500 billion Per capita income is US$10,000 7 th largest trade partner for the United States 4 th largest agricultural market for the United States $61 billion in two-way trade in 2003 US exports to Korea amount to $24.1 billion – 2 nd only to Japan in Asia Imports from Korea amount to $37 billion US is a major foreign investor in Korea Trends in FDI: $7.307 billion was invested in Korea from January to September 2002, increasing by 8.3% year-on-year from 2001’s $6.75 billion
AMCHAM Korea Doorknock 2004 5 March 2004, GM announces $1.45 billion investment in Korea, making Korea GM’s platform in Asia March 2004, Prudential Financial announces plan to purchase Hyundai Investment & Securities February 2004, Citigroup announces $2.7 billion acquisition of KorAm Bank making this the largest Citigroup investment in Asia In 2003, Lonestar invested $1.2 billion to acquire majority ownership of KEB In 2003, AIG and Newbridge Capital invested $1.1 billion and won a bidding war against LG Telecom for control of Hanaro with full support of CEO and the union In 2003, Goldman Sachs won a victory in the courts with a landmark decision that put Korean distiller, Jinro into court receivership for defaulting on debt. Judgment was upheld in appeal. Foreign shareholders increased investment in Korean stock market in from 36% to 40% American Firms Have High Confidence In Korea
AMCHAM Korea Doorknock 2004 6 Korean Government Committed to Calm March 15 Reuters: Investors Stand Firm on South Korea Politics. “There’s not much change in policy-making or the team that is managing Korea.” March 15 New York Times: Prime Minister Promises Continuity in Seoul. “Tom Ridge, US Homeland Security secretary remarked over the weekend on the general sense of calm in the country. One of the interesting stories within the story of your political scene is that there’s a constitutional process and a rule of law that follows and that it remains business as usual both domestically and internationally.” March 18 Business Week Asia: An End to Roh’s Woes – Impeachment May Give Korea’s President a Boost. “Despite the shock waves sent out by the political crisis, the short-term impact has been limited.” “Korea’s uncanny ability to recover from difficulties, such as the ’97-’98 economic crisis is encouraging. As Korea’s democracy matures, the political process will become more stable and predictable.” William C. Oberlin, President, AMCHAM Yonhap – March, 2004
AMCHAM Korea Doorknock 2004 7 “Funds Still See Opportunities in Korea Despite Recent Jolts. If anything, foreign fund managers see the jolts as creating buying opportunities. Korea still offers the best combination of earnings growth and valuation compared to the rest of Asia.” Wall Street Journal March 15, 2004 “Citigroup Decides to Bank on Korea. Citigroup announced their plan to invest $2.7 billion to acquire KorAm Bank.” Barron’s Online March 1, 2004 “IMF Ups South Korea’s 2004 Growth Forecast to 5.5%” Dow Jones Newswires February 25, 2004 “Korea IT Exports Surge 51.4% as shipments of semiconductors and mobile handsets increased.” Wall Street Journal March 10, 2004 “Intel Sets Up R&D Center in Korea” Dow Jones Newswires March 8, 2004 “US Not Worried About Roh Impeachment Effect on 6-Party Talks. US-Korea relations and our alliance remain strong, stable and vital.” US State Department spokesman Richard Boucher Dow Jones Newswire March 12, 2004 “General Motors announced $1.49 billion investment plan into Korea. GM Daewoo is considered an ideal platform for exporting to the rest of Asia, Europe and North America.” Wall Street Journal March 11, 2004 What People Are Saying About Korea
AMCHAM Korea Doorknock 2004 8 President Roh Moo-hyun’s Current Challenge. Roh Moo-hyun became Korea’s first president to be impeached. “Ultimately, the impeachment action has to be decided by the Constitution Court and my expectation is that the court will reach a decision in accordance with law.” President Roh, Moo-hyun March 12, 2004 The Constitutional Court will review the impeachment. The National Assembly voted to impeach Roh for alleged election law violations, corruption scandals and economic incompetence. Local National Assembly Elections will be held April 15 th. These elections are considered to be a referendum for President Roh. “Mr. Stability” Prime Minister Koh Gun is Acting President Veteran Bureaucrat DPM Lee, Hun-Jai Promises Reform Will Continue and Economy Won’t Suffer Still Supporting the U.S. Efforts in Iraq March 20, 2004: The Defense Ministry said South Korea will make a decision in early April on a new deployment location for additional South Korean troops in Iraq, making South Korea the 3 rd largest country with troops on the ground in Iraq after the US and UK.
AMCHAM Korea Doorknock 2004 9 AMCHAM’s Outlook On Korea AMCHAM believes : Korea’s macro-economic outlook remains strong Korea is experiencing a political crisis, not an economic crisis Korea is moving towards a more transparent economy Korea’s future will be stable: based on healthy macro- economic figures, sound US-Korea relations, and a clear North Korea strategy Korea’s foreign reserves are $151 billion – one of the highest in the world Korea’s GDP growth rate of 3.1% in 2003 was again the highest among OECD members
AMCHAM Korea Doorknock 2004 10 Challenges to Korea’s Economy External factors (North Korea nuclear situation, fragile global recovery) make investors nervous about South Korea Korea’s export potential could be threatened by slow global growth and increased competition from Japan due to further appreciation of the won against the yen The China effect is both a great opportunity and a threat to Korea Lack of labor flexibility remains a major concern Consumer debt has ballooned & led to liquidity crisis among credit card companies Financial & corporate restructuring is not yet complete
AMCHAM Korea Doorknock 2004 11 U.S.-Korea Bilateral Investment Treaty Promote the completion of a Bilateral Investment Treaty (BIT) between the US and Korea Support the initiation of a Free Trade Agreement (FTA) dialogue between the US and Korea Urge Korean authorities to maintain the momentum of true reform - “do the difficult things” Continue to advise and assist in overcoming structural and behavioral problems that defeat and distort market forces
AMCHAM Korea Doorknock 2004 12 Peace and Prosperity on the Korean Peninsula Korea and the U.S. have enjoyed a strong alliance for over 50 years. Support constructive engagement policies with North Korea that lead to a peaceful diplomatic solution. 6 Party Talks have been encouraging so far. China, Japan and Russia all have strong interests in maintaining a nuclear free Korean peninsula. Maintain the US troop presence on the peninsula - essential for deterrence and regional stability. " U.S. troops are necessary at the present for peace and stability on the Korean peninsula and will be in the future as well. " President Roh, Moo-hyun
AMCHAM Korea Doorknock 2004 13 Labor Flexibility 1.In order for Korea to become a regional hub, labor flexibility is critical. 2.We encourage the Korean government to enhance the ability for companies to successfully adjust their workforce based on business cycles. 3.Foreign companies in Korea are reluctant to increase investment - hire more employees even when the market is doing well - because of the difficulty in downsizing when the market slows down. 4.Take progressive stance on reducing inflexible labor laws and practices
AMCHAM Korea Doorknock 2004 14 Financial Markets and Business Practices Develop advanced financial markets in Korea - stimulate innovation and ensure best practices relative to international standards Allow on-shore local financial institutions to offer derivatives and risk averse products at par with off-shore financial institutions (e.g. commodity imports hedging) Ensure a low-risk business environment - improve business practices and transparency and reduce regulatory and supervisory risks Remove unnecessary frictions and inefficiencies - reduce hidden costs and remove barriers to innovation Ensure a level playing field - eliminate distinctions between domestic- foreign, large-small, old-new, etc. Eliminate distinctions between resident and non-resident status for financial institutions and their clients Continue simplifying foreign exchange regulations and reporting requirements
AMCHAM Korea Doorknock 2004 15 Automobiles Reconsider new regulations being introduced that are not in line with normal international practice Reduce the burdensome tax structure 1.Restructure the tax system for vehicles in such a way that vehicles of larger engine displacement, (above 2.0 liters), are not disadvantaged. 2.Ensure that imported vehicles are not subject to punitive taxes or import clearance procedures. Establish a regulatory framework that supports dealer floor plan or wholesale financing for dealer inventory by providing for “secured interest”, a neutral tax structure, and title security. 1.Establish “self-help” repossession processes for secured auto lenders. 2.Allow licensed new car dealers to participate in the selling of used vehicles, concurrent with new car operations. 3.Establish a reduced “flat fee” for mortgages on vehicles, regardless of the amount of the mortgage.
AMCHAM Korea Doorknock 2004 16 Pharmaceuticals Discontinue anti-competitive practices such as: Unilateral reimbursement restrictions which deny access to innovative products Discriminatory pricing policies including A7 Pricing, Lowest Transaction Pricing, and Re-pricing Only ask for bridging studies when there is valid scientific evidence of ethnic sensitivity requiring an additional study in the Korean population.
AMCHAM Korea Doorknock 2004 17 Intellectual Property Rights Obtain sustained, consistent enforcement of IPR rights Transparency in the enforcement process Bring Korean copyright standards into line with international standards and protect works from 1949 as stated in the Trade- Related Aspect of Intellectual Property Rights (TRIPS) Protect work for copyrights as of the death of the creator, not 50 years from the first publication of such works Extend the period of copyright protection from 50 years to 70 years in harmony with the majority of other industrialized nations. · Enact laws to protect copyrighted music and publications on the Internet. Decisions in KDDRC dispute settlement are based on Korean trademark laws. Hence, there remains a need to amend trademark and unfair competition statutes to specifically protect trademarks and trade names on the Internet.
AMCHAM Korea Doorknock 2004 18 Legal Services Fully liberalize the legal services market Currently, multinational companies are importing legal expertise from Hong Kong and Tokyo Korean firms also are suffering because they should have access to international legal services Prepare a clear time-table for the full opening of the Korean legal services market
AMCHAM Korea Doorknock 2004 19 Country Image Help Korea to improve its international image, especially in the context of the current nuclear issue with North Korea, the international perceptions of anti-American sentiment and a militant workforce Continue to improve English proficiency Continue to improve quality of life in Seoul, making it more livable Proactively provide international media a positive view of Korea
AMCHAM Korea Doorknock 2004 20 Our Recommendations for the U.S. Government Encourage business in and with Korea Encourage senior USG officials to visit Korea on a regular basis Encourage Bilateral Investment Treaty to lock in reforms Work with Korean government to approve treaty quickly Support rational efforts to facilitate legitimate travel to the U.S. Encourage a rational balance between the need for security and the need to help legitimate travel continue. Focus on a risk-based approach to visa issuance, rather than the current one-size fits all approach Korea has no domestic terrorist groups and has never proven to be a security threat to the U.S., so its citizens should not be grouped with other countries who have. THE U.S. IS LOSING BUSINESS, STUDENTS & TOURIST DOLLARS!
AMCHAM Korea Doorknock 2004 21 Our Recommendations for the Korean Government 1.Quickly and transparently resolve political crisis 2.Financial markets can only function in a transparent environment Support and encourage corporate transparency 3.Support Bilateral Investment Treaty to show continued commitment to reform 4.Improve labor flexibility Inflexible labor hurts Korea’s competitiveness 5. Improve FX reporting Reporting process is still too onerous & cumbersome
AMCHAM Korea Doorknock 2004 22 Top 10 Engines of Growth 1. Digital TV / Broadcasting 2. Display Systems 3. Intelligent Robots 4. Next Generation Automobiles 5. Next Generation Semiconductors 6. Next Generation Telecommunications 7. Home Networking 8.Digital Contents / Software Solutions 9. Next Generation Batteries 10. Biomedicine and Artificial Organs
AMCHAM Korea Doorknock 2004 23 For more information, please contact: Tami Overby Executive Vice President email@example.com Tel: 822-564-2040 Fax: 822-565-2050 www.amchamkorea.org