SEOUL, Aug. 4 (Korea Bizwire) – South Korea’s investment environment is mostly favorable to foreign companies with its speedy administrative process and low corporate tax rates especially appealing to investors, a report showed Thursday.
However, sluggish population growth and the relatively low level of policy transparency serve as hurdles to foreign investment in Asia’s fourth-largest economy, according to the report by the state-run Korea Trade-Investment Promotion Agency.
The report compares the market environments, managerial climates and investment policies in 17 advanced countries and 15 emerging economies, which are known to influence foreign direct investment.
According to the findings, it takes an average four days to establish a company in South Korea, the fifth-shortest period among the 32 countries. South Korea also scored well in the time needed for construction permits and export and import clearance.
South Korea’s corporate tax rate stands at 33.2 percent, the fourth-lowest after Canada’s 21.1 percent, 25.9 percent in Ireland and 32 percent in Britain.
South Korea also scored high in such categories as per-capita purchasing power and economic growth rate for the past four years.
But the report cited South Korea’s lack of policy transparency and low population growth as unfavorable factors.
South Korea scored 3.25 points out of a full 10 in policy transparency, ranking among one of the lowest. Among advanced economies, only Italy was lower with 3.1 points.
South Korea’s low population growth rate of 0.14 percent was also cited as a hurdle, which could cause foreign investors to consider the country a stagnant market. South Korea’s population stands at 50.62 million.
Seoul’s population growth rate was lower than most advanced economies, while it was the second-lowest among developing countries after Russia’s 0.60 percent.
“Low population growth has a negative impact on outlooks for market growth,” the report said. “Policy measures are needed to expand the market size as part of efforts to improve the country’s investment environment in the long term.”