This firm commitment to building trust also lies at the heart of his administrative policy as the mayor of South Korea’s capital.
Likewise, his strategy for attracting FDI begins with building an environment of trust. “Based upon this trust, I have focused on the creation of a business-friendly environment, where all companies, whether domestic or foreign, can conduct their businesses in a transparent and fair environment,” he explains. “To do so, several regulations that could discourage foreign investment have been eliminated, and in some cases, generous incentives are provided to encourage FDI.”
FDI into South Korea was $12.8bn last year, and the capital obviously accounts for a huge chunk of these investment flows and sets the standard for the rest of the country. Despite the Asian crisis of 1997, Seoul has seen a relatively steady increase in FDI since the early 1990s, largely due to diligent government efforts to streamline foreign investment procedures, open up the market and promote inward investment.
Seoul has designated five major growth engines that will lead its economic development: international financial services, information and communication technology, digital content, biotechnology and nanotechnology, and the fashion and design industry.
However, Mr Lee is not focusing on particular countries from which to attract investment. Rather, he is concentrating on improving the overall investment climate of Seoul, so that world-class companies from around the globe will invest in South Korea. He believes this approach is validated by the significant increase in FDI flows to Seoul since he took office. The city posted FDI inflows of $2.3bn for 2002, followed by a 70% increase to $3.9bn for 2003, and a further 44% increase to $5.6bn for 2004.
Seoul is engaged in fierce competition with other major cities, such as Shanghai, Beijing, Tokyo and Hong Kong, but is determined to become the business hub of north-east Asia. Mr Lee believes Seoul’s advantages in terms of geographical location, market potential, human resources, the size of the economy, its financial market, ICT sector, public safety and culture give it a greater competitive edge and that it is destined to become a world-class city.
To this end he has put creating “a foreigner and business-friendly environment” near the top of his list of administrative policy goals. To create an infrastructure and investment environment that meets global standards, he is pushing ahead with a spate of public works projects. He has achieved a “green revolution” and reformed the city’s public transportation system by shifting focus from vehicles to people – a move that has been a benchmark for many other cities. The soon-to-be completed Cheonggyecheon restoration project, the green Seoul Plaza at the heart of the city, and the Seoul Forest are now symbols of its environment-friendly outlook.
“As a business hub of north-east Asia in the 21st century, Seoul is set to become a better place to live – for both Koreans and foreigners – and a business-friendly city,” Mr Lee says. “I hope more foreign companies come to dynamic and vibrant Seoul to experience this for themselves.”