As one of the “Four Asian Tigers” — the developed economies of east Asia that underwent rapid industrialisation during the latter half of the 20th century — South Korea is synonymous with high growth, high tech and large industrial conglomerates. The term ‘Miracle on the Han River’ describes how it went from being one of the world’s poorest to richest countries in the space of a half a century.

Since its establishment in the 1990s, InvestKorea has promoted the country’s development, focusing on quantitative measures of inbound foreign investment. But with the encircling threat of recession, high interest rates and climate change, Shawn Chang, commissioner of the investment promotion agency (IPA), tells fDi that the next step for South Korea is sustainable development and high-quality investments.

Q: What is the biggest challenge your IPA faces currently?

A: Like any other country, we are going through issues such as Covid-19 and global inflation. Luckily, Korea has not yet been as affected by inflation as other countries, but increasing interest rates is freezing pockets. Companies are looking for an investment destination, but investor sentiment is not looking too great. So, the investment market has slowed down because of these issues. Global foreign direct investment (FDI) is very volatile due to all global issues, such as the Russia–Ukraine War, inflation, and Covid-19. 

Sustainability is very important in responding to global issues, and every IPA should pursue that. In the faster development era, before 2000, every country focused on rapid development instead of long-term, sustainable development. Considering this situation, the demand for sustainable development, which can minimise the aftermath of development, is expanding, and InvestKorea, as well as global IPAs, are engaged in investment promotion for sustainable development. 

Q: The tagline of Waipa 2022 is ‘IPAs shaping the future of FDI’. From your perspective, what is the future of FDI? 

A: In terms of achieving economies of scale, quantitative expansion of FDI in all industries — except those affecting national security — is important, but for the long-term development of the country, qualitative growth should be pursued rather than quantity.

In the 1990s, we established InvestKorea to overcome the Asian financial crisis and began to attract FDI in earnest. We had no choice but to pursue quantity rather than quality because the goal was to overcome the immediate crisis and grow. However, the situation in Korea is different now. Korea is truly a global leader that has been inducted into the UN Conference on Trade and Development’s list of developed countries group since 2021, pursuing sustainable and qualitative growth rather than simple quantitative growth.

The expansion of investment attraction related to supply chains, carbon neutrality, and digital transformation is part of this activity. Previously, Korea’s investment activities focused on increasing the amount of investment by informing others about the country itself, rather than promoting specific industries; but recently, it has focused on attracting high-quality investment to specific industries and companies.

Q: Do you think there is an aspect of investment promotion that needs to be reformed or changed as we navigate volatile times?

A: It is important to strengthen incentives in a strategic field. In other words, incentives for industries and regions that the state must strategically foster should be strengthened. Korea is strengthening cash support for global issues, such as carbon neutrality, supply chain disturbance and non-metropolitan areas. This will serve as the basis for the Korean economy to develop more sustainably by fostering future core industries, such as semiconductors, bio-health and promoting balanced national development.

Shawn Chang is commissioner of Invest Korea. 

Mr Chang was one of several IPA directors interviewed for a fDi podcast episode recorded at the WAIPA World Investment Conference 2022. Listen to the full episode here.