Invest Korea chief Han Ki-won has vowed to focus on merger and acquisitions to help the government attain its yearly goal of attracting $15 billion in foreign direct investment.
“Korea needs to step up its game and deliver differentiated services to foreign investors in order to attract more investment from them,” Han said in a recent interview with The Korea Herald. “For instance, we can work on the M&A sector.“
Another solution was to turn to Japanese investors.
“A solid combination of these two -- M&As and Japanese investment to Korea -- would be an ideal option,” said Han, who had just returned from a business trip to Japan where he met with a number of Japanese investors.
Han is naturally enthusiastic about mergers and Japan because both are right up his alley.
Han’s appointment this year as the head of Invest Korea, the nation’s key foreign investment promotion arm under the Korea Trade-Investment Promotion Agency raised some eyebrows since unlike his predecessors who were a bureaucrat, a lawyer and a businessman, Han was a financial expert.
The new chief graduated from Waseda University and went on to head the U.K. branch of Daiwa European Investment Bank and then co-head the U.K.-based DC Advisory Partners.
Under Han’s watch, foreign direct investment from Japanese investors that came in via Invest Korea between January and September more than doubled from last year to $3.3 billion.
Effectively combining merger ideas with strategies to get more investment from Japan may herald the creation of a new business model, Han said.
Invest Korea’s goal is to attract $10 billion of the $15 billion foreign direct investment the government has pledged to attain this year.
But according to Han, creating a feasible, long-term business model was just as important as hitting the government-assigned targets.
“Foreign direct investment to Korea peaked during the days of the Asian financial crisis, reaching about $13.7 billion (annually). But things were different back then. In a highly matured country, achieving $13 billion, $15 billion is either a ‘yes!’ or ‘no way!’ sort of thing.”
Han explained the goal was an attainable one, but unless the support was there, it could just as easily appear impossible.
“What I need to do here is to further stimulate investment, and to do this, we need incentives,” he said.
The commissioner said that he prefers to give individual feedback and consultations to foreign investors and see what types of incentives they are attracted to, rather than depending on generalized investment theory.
“When discussing how to attract investment from abroad, people go asking which should come first, the incentives or the deregulation, mentioning things like the Singapore model and the London model, but such debate can really end up in a dead-end, redundant conversation.”
“What we need here is to discover companies that are willing to join us in forming a larger global chain that yields profit,” Han emphasized. “We need to think the other way around, investing in these foreign companies first, which will in turn attract investment to Korea through the money they received from us.”
In theory, there are three classic categories of incentives: tax redemption, cash grants and property offers.
“But when foreign investors enter Korea, they have to meet certain conditions as well. We want to look at things like whether these firms are high-tech based, create many job opportunities, invest a large sum of money in the long run and so on,” he said.
The commissioner affirmed that these incentives are government offered, and that Invest Korea offers investors additional incentives, albeit separately.
Han said the decision to come to Invest Korea reflected a change in his lifestyle and business philosophy.
As a “posh” investment banker, the commissioner said he was used to driving Porsches and enjoying all the good things in life.
“Now I ride bicycles,” he said, seemingly summing up the change in his life in the single word, “bicycle.”
As the Korean branch head of Daiwa between 2004 and 2008, Han said that he accumulated an abundant amount of experience working with Korean local governments and in project financing. Later on, while serving as the managing director of Close Brothers financial services group in the U.K., he found that there could be more bridges for linking Asian firms with their European counterparts.
“That was when I decided to make use of my expertise, connections and knowledge on M&As to contribute (to Korea). Before that, I had been feeding on commissions by selling information on different countries.”
On whether the intense territorial dispute between Japan and China over Diaoyudao in Chinese and the Senkaku Islands in Chinese could redirect Japanese investment from China to Korea, Han firmly dismissed the possibility.
“Japanese investors have no tendency to depend on emotions when deciding investment,” he said. “They don’t take such things as economic matters.”
By Chung Joo-won (
joowonc@heraldcorp.com)
