A majority of US businesses in South Korea were optimistic that investment in the East Asian country will continue over the next two years, and picked Korea as the second most preferred location for regional headquarters in Asia after Singapore, survey results showed on April 7.

In an annual survey of member companies by the American Chamber of Commerce in Korea (AmCham Korea), 44 per cent of the respondents said they will increase investment in Korea through 2024, while another 42.9 per cent said there will be no change to their investment levels.

Six per cent said their investment will decrease in the next two years, and 7.1 per cent said their investment outlook was unclear.

More than 80 companies responded to the survey between February 24 and March 25, which was designed to gather opinions on the business environment here ahead of the inauguration of the new government and provide insight to make Korea a more attractive investment destination, AmCham Korea said.

As for the current business environment in Korea, 29.8 per cent said it was good; 47.6 per cent said it was average; and 21.4 per cent said it was below average.

When asked about key areas for improvement, for which respondents could choose multiple answers, nearly four out of five (78.6 per cent) respondents picked Korea’s unique regulations, followed by CEO risks (42.9 per cent), rigid labour laws (42.9 per cent), high tax rates (25 per cent) and others (16.7 per cent).

As for the biggest difficulty for businesses in Korea, to which respondents could also choose two or more answers, labour policy (67.9 per cent) topped the list, followed by tax policy (56 per cent) and CEO liability (46.4 per cent).

Only 15.5 per cent chose immigration policy and 13.1 per cent chose education policy such as foreign schools as difficulties.

Slightly over half (51.2 per cent) of the respondents said government policies had a negative impact on their business operations last year, while another 40.5 per cent said the impact was neutral.

Only 3.6 per cent said they had a positive impact.

Almost four out of five respondents expected to see moderate to significant change under the incoming government.

Two out of five companies said they did not meet their growth targets last year due to Covid-related supply chain problems, uncertain economic conditions and other relevant issues that hindered sales.

“AmCham is confident that President-elect Yoon Suk-yeol recognises the value of creating a global investment environment to enhance South Korea’s competitiveness. We will work closely with his administration to make Korea the top business destination for global companies in Asia,” AmCham chairman James Kim said.

AmCham plans to release later this month a Korea-US FTA implementation scorecard that examines the concerns and suggestions of the international business community in Korea in regard to the bilateral FTA.