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Ombudsman's Office
Korea’s Foreign Investment Ombudsman
System Introduced at
World Bank Group Forum 2016

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  •    On the invitation of the World Bank Group (WBG), I visited its headquarters in Washington D.C. to attend the “Investment Policy Forum 2016” on Nov.1. In particular, I participated in the high-level panel discussions that enabled various investment stakeholders to gain a deeper understanding of key issues. These include the political economy of regulatory conduct affecting retention and expansion of FDI and the systemic investment response mechanisms enabling a more coordinated and timely response of governments in addressing issues arising from investors.
       Within this context, I had the opportunity to present on Korea’s Ombudsman system and share the recent major operational reforms that the Office of the Foreign Investment Ombudsman (OFIO) has gone through since its founding in 1999. Specifically, our office has recently shifted our grievance-collection system from ‘passive call-waiting’ to ‘proactive outreach’. Previously, nine “home doctors” used to await emergency calls regarding foreign investor grievances from foreign-invested companies in Korea. But home doctors have rarely received calls since then. Even if they did receive the call, it was too late to respond properly. To prevent this from occurring, we now proactively reach out to companies to listen to their complaints and problems. Under the leadership of the

  •    Ombudsman, we go out in small groups and prescribe solutions on-site after carefully listening to business-related challenges.
    Another operational reform is that we have organized a new senior advisory group comprising of renowned scholars, retired professors and retired high-ranking government officials. These days, foreign companies with more advanced technologies suffer from grievances due to the complexity of the issues involved. For the same laws and decrees, different government agencies have different interpretations. Consequently they have to pay heavy taxes and fines. When things get worse, they wrap up their business and leave the host country. To avoid such unfortunate events, we utilize the high level of expertise of senior advisers. By effectively leveraging their professional inputs, we can resolve the grievances at relatively smaller expenses.
       The purpose of the forum was to maximize the investment potential of international trade and investment agreements. The World Bank is keen on the flow of FDI as it believes that this brings substantial benefits to the world economy and particularly to the economies of developing countries. The benefits to the host country include easier access to world markets, transfer of capital, technology and managerial skills. To realize the maximum benefit of FDI, the World Bank

  •    believes that foreign investment should not only stay in the host country but should also be expanded. To make this task possible for their client countries, namely developing countries, the Bank is trying to design a coherent investment policy and promotion strategy that can be adopted by their client governments.
       According to the Bank’s observations, many developing countries attract foreign- invested companies but many of them also leave the host countries for two reasons: they realize that the various incentives promised by the host governments no longer exist or there is no place to go when they encounter unexpected problems and difficulties except through an expensive court process. But the Bank people say that Korea is exceptionally different, as the country has the Ombudsman system which provides necessary services for foreign investors. As such, the World Bank has ranked Korea as the fifth easiest place to do business.
       The forum came to an end by reviewing the result of the Bank’s recent research on the failures of FDI in developing countries. The research team points out that macroeconomic instability and political risks are two principal factors that would make foreign investors leave the host countries.
       Due to many factors taking place both inside and outside the country, Korea should take heed of potential risks that might undermine its macroeconomic stability and political landscape. If Korea isn’t ready to preemptively manage such risks, the country could end up facing another economic recession, most notably in the field of FDI. Therefore, the country should pay close attention and manage such risks to prevent any issues from emerging in the future.

    By Dr. Jeffrey I. Kim
    Foreign Investment Ombudsman
    jeffikim@kotra.or.kr
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