In keeping with South Korea’s recently announced three-year external economic policy plans, the Ministry of Strategy and Finance is opening up its accounting, law and other service sectors.

In order to lure more foreign investment, South Korea’s government will also be reducing regulations for the country’s free economic zones that include strategically selected towns currently under construction. This opening could be a boost for the country’s waning foreign investment market, which has been a cause of concern in recent years. Last year South Korea saw only $4.46bn in capital expenditure on greenfield projects, which compared unfavourably with the likes of Hong Kong ($8.55bn) and Singapore ($1500bn), according to fDi Markets data.

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In AT Kearney’s FDI Confidence Index, South Korea last year dropped out of the top 25 for most attractive nations; it remains absent from the 2010 list as well. According to the Korea Times, the country is hoping to draw in $14bn-worth of FDI this year, focusing particularly on the green and technology sectors. There are also plans in the pipeline to develop an industrial complex for parts and materials manufacturers, Japanese investors being specifically targeted.

According to a recent article in the Financial Times, South Korea will still need to up its game to attract long-term investors; the country has continually punched below its weight with regards to FDI because of factors such as distorted union reforms, businesses run in large part by ‘opaque clans’ and regulations that are seen as vague at the best of times and incomprehensible at worst.

An example of South Korea’s underperformance when it comes to FDI is the Universal Studios theme park (plans for the $2.67bn resort were first announced in November 2007), which flailed for two years with no investors. The park was finally revived, not by major international investors, but homegrown backers Posco – the world’s fourth largest steelmaker — and Lotte Group, which operates the country’s second largest retailer.

Construction of the site is set to begin in 2011and it is due to open in 2014 in Hwaseong City, near Seoul.

Ginanne Brownell