South Korea has a prime opportunity to position itself as a hub for global companies in the Asia-Pacific region, with Western firms less inclined to go to Hong Kong and China amid U.S.-China tensions, according to a U.S. business analysis. But the prerequisite to become this hub is regulatory reforms.

On Monday, the American Chamber of Commerce in Korea (AmCham Korea) stated that it had submitted a report to the Korean presidential office outlining strategies for Korea to attract global corporations to Seoul as their Asian hubs. The report was created based on a survey of approximately 800 AmCham members regarding the Korean business environment and a comparative analysis of policies across different countries, and included statements from the AmCham board.

Highlighting a shift in the traditional preference of global corporations for Hong Kong and China as their Asian hubs due to stringent lockdown measures during the Covid-19 pandemic, the report suggests that Korea is emerging as a viable alternative, ranking second in preference after Singapore. Hong Kong and Shanghai currently host about 2,300 global corporate hubs and the potential relocation of these hubs to Korea is anticipated not only to boost investment inflows but also to create new opportunities for Korean executives. According to data from the Singapore Economic Development Board, 61 percent of jobs created by Singapore in 2022 were in hub and business services and largely attributable to the Asia-Pacific hubs established by global corporations there.

But the AmCham report also underscored that for Korea to effectively attract global corporations as regional hubs, it must establish a regulatory environment on par with other countries in the region. It specifically pointed out deficiencies in Korea‘s labor market flexibility and policies compared to competitors like Singapore and Japan while also listing concerns about the potential criminal liability for corporations under Korea’s domestic legal framework, suggesting that mitigating overall risk for global corporate representatives could enhance the country’s attractiveness as a destination for regional hubs.

“Necessary regulatory reforms will solidify Korea’s position as a preferred destination for multinational corporations,” AmCham Korea Chairman James Kim said, highlighting cooperation among the government, various stakeholders in Korea, and global companies as an essential element for this to happen.

By Kim Hee-su and Chang Iou-chung

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