Korea Times | 09-16-2010
Bring order to investment ’spaghetti bowl’
By Kim Tae-gyu
Currently, thousands of bilateral investment treaties or agreements are in place and the number continues to rise. When all of them are drawn on a map and viewed from overhead, they look like spaghetti in a bowl.
The “spaghetti-bowl” situation is expected to strengthen down the road to generate more and more conflicts and disputes between nations due to a lack of multinational frameworks regulating cross-border investments.
In this climate, the Korea Trade and Investment Promotion Agency (KOTRA)’s foreign investment ombudsman Ahn Choong-yong claims that aftercare services for existing overseas investors will be one of the best policies.
“Unlike trade governed by multinational negotiations such as the Uruguay Round, investments are based on bilateral treaties and it will take quite a long time to set up multinational rules,” Ahn said in an interview with The Korea Times, Thursday.
“Hence, cross-border direct investments will be regulated by multi-layered and multi-faceted individual agreements for the time being, possibly leading to a rising number of conflicts. To draw more investments, we are required to prevent such investor-state disputes.”
The work also describes Ahn’s position as an ombudsman.
“Governments tend to go all-out to attract fresh foreign investment. But we need to understand that a majority of these are carried out by existing investors — the proportion reaches as high as 60 percent,” Ahn said.
“Accordingly, timely and efficient aftercare services for existing foreign corporations should be one of our top priorities to entice further investment, which is crucial for economic growth.”
The professor-turned-ombudsman picked several examples of having taken care of overseas firms in trouble in Asia’s fourth-largest economy in a variety of businesses ranging from automobiles to handsets.
Ahn, 69, defined his role as an “honest mediator who always thinks and acts on behalf of foreign investors as an action-oriented solution-seeking trouble shooter.” In other words, he wants to be the right person for troubled foreign companies to turn to.
Since its inception in 1999, the nation’s foreign investment ombudsman system has successfully dealt with numerous grievances and problems raised by foreign-invested companies here during the first decade of the new millennium.
The endeavor is gaining more efficiency under the stewardship of Ahn, who says that he is able to “expeditiously facilitate” a lot of work because he concurrently serves on the Regulatory Reform Committee.
Ahn joined the committee geared toward easing unnecessary regulations early last year and took the chairmanship of the organization this June.
“The two jobs are interconnected and I can better grapple with aftercare services for foreign companies in doing away with the grievances and difficulties in a preemptive manner,” Ahn said.
The success of the unique ombudsman system has drawn international attention as demonstrated by the fact that Ahn was invited to the United Nations Conference on Trade and Development (UNCTAD).
At an UNCTAD workshop held in Xiamen earlier this month, Ahn introduced the Korean model for preventing investor-state disputes through aftercare services.
The workshop eventually asked its member countries to employ aftercare services similar to the Korean model and requests to benchmark the ombudsman format have inundated the country.
Yet, Ahn does not rest on past laurels and points out that Korea still has a long way to go before it creates a perfect environment for foreign investors, particularly in the labor market.
“The three stumbling blocks in enticing investments to Korea are the lack of flexibility in labor markets, militant trade unions and high wages,” said Ahn who is also a distinguished professor at Chung-Ang University.
“More significantly, we have to redefine our mindsets toward global companies. The xenophobic mentality is still present throughout the country and this must change in the era of globalization.”