Foreign, local firms differ on investment views
A think tank's survey of businesses in South Korea shows that both foreign and local entrepreneurs would scale back their business operations in response to North Korea security threats, but local businesses are more sensitive to such warnings.
The East Asia Institute in Seoul found that only 13 percent of the 169 foreign CEOs and executives it polled said they will freeze their investment activities if the UN Security Council takes up the North Korean nuclear issue.
The percentage goes up to 20 percent if economic sanctions are imposed on the communist country, which North Korea has said it would regard as a declaration of war.
In contrast, many domestic companies, whose businesses are more vulnerable to changes on the Korean Peninsula, were more jittery about any kind of security threats.
About 29 percent of the 101 domestic companies polled said they would stop all investment if the North Korean issue is sent to the UN Security Council.
If economic sanctions are imposed on North Korea, 41 percent of the domestic respondents said they would halt all investment activities.
Even though foreign investors were less likely to worry about UN involvement, they were still wary of any form of military action, with 63 percent saying they would freeze their investments if the United States imposed a naval blockade on North Korea.
Despite security concerns, the majority of the foreign companies said they were still were confident about the future of the Korean market. Although 73 percent said the U.S.-Korea alliance will weaken over the next five years, 77 percent of these people said they would increase their investments in South Korea.
"The bleak assessment about the U.S.-Korea alliance is not likely to chill foreign investment here immediately," said Lee Nae-young, political science professor at Korea University.
The East Asia Institute’s survey was conducted from February through May.
Forty-three percent of the foreign respondents were from the United States, followed by 21 percent from Japan and 14 percent from Europe. The foreign companies had 963 employees on average.
Thirty percent of the foreign respondents were in the manufacturing sector, followed by 15 percent in the finance and insurance sectors and 8 percent in the wholesale and retail industries.