Wednesday, September 28, 2005

Nurturing the Korean Economy’s Budding Recovery

Khang Hyo Shang, Editor, Business News Desk, The Chosun Ilbo

“All of a sudden, the seawater receded, leaving various types of fish struggling on the sandy ocean floor. People on the beach eagerly began to pick up the fish, enjoying this unexpected turn of events. However, before long, a huge tsunami, tens of meters in height, struck and in a heartbeat they were swept out to sea.” This is how former Prime Minister of Malaysia Mahathir Mohamed described the tsunami that devastated South Asia on December 26, 2004, during the recent Asia Leadership Conference sponsored by The Chosun Ilbo.

The people on the beach, busily indulging in the good fortune that had come their way, did not realize the tragic fate that awaited them just a few minutes later. The political and social leaders of the countries affected by the tsunami, who could hardly imagine the potential damage that a earthquake-triggered tidal wave can cause, failed to take steps to help prevent so many people from being victimized by this catastrophe. There seems to be certain similarities between this unfortunate incident and the current situation in Korea.

There has been disagreement among observers over the matter of whether or not the Korean economy has started to recover in earnest. However, one thing is quite evident in this regard: there has been a steady increase in the number of specialists who believe that an economic recovery is beginning to bloom.

A flower bud, with a potential to develop into a wonderful blossom, can be compared to Korea’s current economic situation. A flower bud can only bloom when nurtured with adequate care; if left untended and exposed to harsh conditions, it is likely to experience a premature demise.

When looking at the prevailing circumstances in Korea, it can only be wondered if the bud of economic recovery will wither away before it has a chance to fully bloom. While it appears that consumption spending has hit rock bottom, the economy overall has yet to show clear signs of a healthy rebound.

Stock prices have lost their upward momentum, while industrial production and the service sector industries have shown few discernible signs of a recovery trend. Meanwhile, due to a lack of more attractive alternatives, idle capital has ended up in less productive investments, such as real estate.

An outcome is the result of related causes. In this regard, a recent series of events has inflicted considerable damage to the government’s credibility and transparency. The recent replacement of economy-related ministers, Lee Hun-jai and Kang Dong-seok, was certainly not good news for the economy. Especially disturbing is the fact that these ministers were replaced without an investigation to determine if there was any actual wrongdoing on their part.

If it is true that investors’ foremost concerns are about transparency and predictability, then the Korean government should be taken to task for having failed to advocate these principles. Here, it would be helpful to remember that Stanley Fisher, former vice president of the International Monetary Fund (IMF), had once pointed out that the credibility of a government represents the most critical factor for ensuring a sustainable economic recovery.

The KOSPI’s (Korea Stock Price Index) inability to remain over the 1,000-point mark is another ominous sign. The 1,000-point benchmark has a significance that extends beyond the Korean stock market itself. Finding ways to breakthrough and remain above the 1,000-point level has long been a key priority of the Korean economy. However, the KOSPI has recently failed four times to remain above this mark, thus disappointing market investors. Unfortunately, the unexpected emergence of bad news recently has served to deflate the positive momentum which had been lifting the stock market.

Adding to these woes, the foreign media have been engaged in aggressive Korea-bashing. While we believe that this criticism is in large part unjustified, it is nevertheless necessary to adopt prudent measures to assure that Korea is not perceived as an international outcast.

Diplomatic conflicts with the United States and Japan are also detrimental factors that tend to weigh down the economy. President Roh Moo-hyun declared at the start of this year that promoting economic recovery would be his No. 1 priority. However, he now appears to be more concerned with various political matters.

A president who focuses primarily on his political goals can hardly be a source of inspiration for people to consume and invest with confidence. Accordingly, political leaders need to be aware of the tsunami that appears to be looming on the horizon rather than seeking to placate the public with “refreshing” rhetoric.

[The Chosun Ilbo, April 7, 2005]

Korea supports Developing Countries
Working for the Co-prosperity of All

Korea International Cooperation Agency

Korea was able to overcome the devastation of the Korean War (1950-1953) and achieve remarkable economic growth largely thanks to the help of the international community. Today, in an effort to return the help it received, the Korean government offers a variety of aid programs for developing countries, with the state-funded Korea International Cooperation Agency (KOICA) overseeing the programs.

Presently, the Korean economy ranks tenth or so in the world in terms of scale. Behind such economic growth, however, has been the support Korea received from the international community. In fact, few countries have received as much attention and aid from other countries as Korea has. When the Korean War broke out in 1950, the United Nations formed the Allied Forces to fight together for the protection of free democracy and after the war ended in a ceasefire in 1953, the organization provided relief supplies and about US$12 billion worth of loans, laying the groundwork for Korea’s rapid economic recovery.

With the initiation of the first five-year economic development plan in the 1960s, the Korean government began establishing vocational training centers to foster the technical manpower necessary for different industries. Twenty-four vocational training centers, established across the country between 1968 and 1981, contributed greatly to Korea’s economic development by cultivating more than 1.2 million technicians.

In the 1960s and 1970s, industrialized countries such as Germany, the United States, Japan and Belgium, and international organizations such as the United Nations Development Plan (UNDP) and the Asian Development Bank (ADB) offered a large amount of relief goods and workers for Korea. Had it not been for the assistance from the international society, Korean economic development would have remained a dream.

Today Korea is offering help to underdeveloped countries. A lot of underdeveloped countries now want to learn from Korea’s rapid economic development more than that of any other industrialized country. Until the 1970s, Korea was a poor country just like them, but now, only three or four decades later, the nation is about to join the ranks of the industrialized countries.

It was in the early 1990s that the Korean government began carrying out aid programs for

Foreign countries in earnest. At the time, Korea’s political and economic status in international society underwent remarkable improvement. Between 1986 and 1989, the Korean economy recorded US$ 29.2 billion in trade surpluses and in 1990 the nation joined the United Nations.

In 1987, the Korean government set up the Economic Development Cooperation Fund (EDCF) to provide long-term low-interest loans for developing countries. In April 1991, under the umbrella of the Ministry of Foreign Affairs and Trade, the government established a state-funded agency to be in charge of all grant-type aid projects for developing countries. This is the Korea International Cooperation Agency (KOICA).

The aim of KOICA is to promote friendly and cooperative relations and mutual exchanges between Korea and developing countries and to strengthen international cooperative networks by supporting their economic and social development. To achieve these goals, KOICA offers a variety of aid programs for developing countries including industrial training, dispatching of volunteer workers, conducting development and feasibility studies, and supplying relief goods. Since 1995, it has also supported the activities of Korean non-governmental organizations (NGOs). All these measures are designed to fulfill KOICA’s founding motto of constructing a co-­prospering human society.

KOICA employs 188 workers in its head office and 24 overseas branch offices. Its programs are largely divided into manpower cooperation projects, development cooperation projects and NGO support projects.

Manpower cooperation projects include inviting industrial trainees from developing countries to Korea to share with them Korea’s development experience and technologies, the dispatch of professional such as medical personnel, taekwondo and other experts, and the dispatch of

Manpower instructors volunteer workers. These projects are intended to help developing countries foster human resources and improve medical care and social welfare.

The development cooperation projects include assisting with feasibility studies for building industrial infrastructure such as roads and power plants, supplying relief goods such as agricultural machinery and tools, office supplies and medicines, and providing project-type support for the construction and operation of public institutions such as hospitals, schools, job-training centers and research institutes.

In addition, KOICA supports the overseas aid projects of domestic NGOs that work to alleviate poverty and improve welfare in developing countries. These include support for Iraq’s post-war rehabilitation, a special aid program for Afghanistan and participating in natural disaster recovery operations.

This year, KOICA aims to contribute to the economic, social and cultural development of developing countries by relieving their poverty, strengthening friendly and cooperative ties, and increasing mutual exchanges with regional bodies such as the Association of Southeast Asian Nations (ASEAN) and the Central American Integration System (SICA). For the effective and efficient implementation of its projects, the organization allocated a budget of US$ 137 million by nation and project.

KOICA plans to expand cooperation in fields that are much needed by developing countries and in which Korea excels such as HRD (human resource development) and IT (information technology). It will also increase humanitarian aid for war-torn Iraq and countries hit by natural disasters and strengthen support for various governmental projects.

Strictly speaking, the history of Korea’s overseas aid is short and the amount is small in scale compared with industrialized countries. However, Korea’s overseas aid will inevitably increase in the future in accordance with the growth of the nation’s economy and international status. Therefore, the government should set a long-term vision and a development plan, and establish a Korean-style international cooperation model that the whole world will acknowledge.

To this end, the government needs to increase the related budget and expand the scale of projects with full national consensus. In addition, for more substantial aid programs, diverse and efficient ways of offering aid have to be developed and new fields in which Korea has a competitive edge should be identified. Lastly, keeping in mind the fact that all aid programs are paid with taxes, legal and institutional systems should be complemented to ensure that these state projects are conducted in a transparent and reasonable way.

The day when its efforts bear fruit, KOICA will see its ideal of constructing a co-prospering human society come true.

Inter-Korean Economic Cooperation:
Current Status And Future Tasks

By Rhee Bong-Jo, Vice Unification Minister, Korea

The June 17 meeting between South Korea’s Presidential Special Envoy Chung Dong-young, the minister of unifi­cation, and North Korea’s National Defense Commission Chairman Kim Jong-il, and the subsequent inter ­Korean ministerial talks led to full restoration and revitaliza­tion o f inter-Korean relations which had been stalemated since July 2004.

Meanwhile the six-party talks on the North Korean nuclear issue that is threatening peace and stability on the Korean Peninsula were resumed. South Korea promised transmission of electricity to the North if the North gives up its nuclear pro­grams. This important proposal will have a positive influence on the progress of the six-party talks.

In particular, at the 10th Meeting of the Inter-Korean Economic Cooperation Promotion Committee, held July 9 to 12, the two Koreas agreed to combine their economic re­sources such as raw material, capital, technology, etc in pur­suing mutually beneficial economic cooperation.

Results of Inter-Korean Economic Cooperation

Inter-Korean economic cooperation was officially launched in 1988. Since the enactment of Inter-Korean Exchange and Cooperation Law 15 years ago, more than 100,000 people from South and North Korea have visited each other’s coun­tries. The total volume of inter-Korean trade has reached $5.2 billion. South Korea is now the North’s second largest trading partner following China and the North enjoys a trade surplus of 51.8 billion with the South. From a humanitarian stand­point, the South has provided the North with 2.4 million-tons of food and 1.9 million tons of fertilizer. Since 2000, the South also has provided the North with 500,000 tons of food and 300,000 tons of fertilizer annually, which have helped relieve food shortages in the North.

Economic cooperation not only promotes inter-Korean dialogue and exchanges and cooperation in various fields accelerates reconciliation and prevents the eruption of political and military conflict. Above all, economy serves as the locomotive for peace and cooperation between the two Koreas. For the construction of Inter-Korean railroads and roads, the North has opened up parts of the military de-marcation line and the DMZ and removed land mines. It has also created a 250-meter corridor on the Gyeongui Line and a 100-meter corridor on the Donghae Line. To establish the Gaeseong Industrial Complex and the Mt. Geumgangsan tourism zone, North Korea has leased to South Korean devel­opers 66 million square meters of militarily and strategically important land in the Gaeseong area, as well as in the Goseong area on the eastern coast.

Status of Economic Cooperation and Future Tasks

Inter-Korean trade has shown remarkable growth in the past 17 years. The total trade volume has increased by 36 times from $19 million in 1989 to $697 million in 2004. Commercial trade has expanded by 17 times from $19 million in 1989 to $348 million in 2004. However, inter-Korean trade volume, along with the number of participating businesses de­creased last year due to the sluggish domestic economy and deterioration in inter-Korean relations. Items for trade consist mainly of agricultural and fishery products and textiles.

The investment in the North by South Korean businesses has also been decreasing. After the first investment in the North in 1996, the total investment by South Korean private businesses reached $19.37 million, excluding the light-water reactor project, in 2003.

If the investment by Hyundai Asan in the Geumgangsan tourism project was excluded, the total investment would stand at a mere $50 million. In contrast to the slow progress in economic cooperation on the civilian level, three major inter ­Korean economic cooperation projects promoted by the gov­ernment, some of which are joined by the private sector, are being carried out smoothly since the inter-Korean summit in 2000.

First, the project connecting inter-Korean railroads and roads on the Gyeongui and Donghae Lines was completed in November last year. South Koreans use these routes to visit the North. About 300 cars travel to the North daily using the two lines. It was agreed that inter-Korean railroads would open at the end of this year, after a test run in October. The Geumgangsan tourism project has been joined by an increas­ing number of South Koreans. The number of tourists to Geumgangsan surpassed 1 million on June 7.

In the Gaeseong Industrial Complex project, operation of manufacturing factories has started in the pilot site. In addi­tion, site grading for the first-stage development of the industrial complex which covers 3.3 million square meters, and construction of infrastructural facilities are under way. As of July 3, 446 workers from the South and 3,193 workers from the North are faithfully working together. In Geumgangsan area, there are 536 South Koreans working with about 700 North Koreans and 450 Korean- Chinese workers.

Factors Hindering Active Inter-Korean Economic Cooperation

Unlike government-level economic cooperation projects that have shown remarkable progress, trade and investment pro­jects in the private sector are still in the initial stage and have yet to meet expectations. This is because the environment and other factors have not yet matured enough for private busi­nesses to flourish. North Korea suffers from serious economic difficulties and has a poor environment for production.

North Korea’s electricity and raw materials are insufficient and infrastructure, such as ports, is in poor condition. North Korea restricts visits by South Korean business ­people and technicians. It also shows rigid attitude toward co­operative investments and even prohibits free-market business activities. Some South Korean companies start up businesses and then suspend them, damaging the trust between the two Koreas. Disguised imports of goods - mostly with falsified certificates of place of origin - from the North to the South seriously damage economic cooperation.

Inter-Korean businesses are highly affected by the funda­mental relationship between North and South Korea. It is diffi­cult for businesses to expand investment because they would have to wholly take on risk. Excessive distribution costs of goods pose another problem. Since there are no land routes to transport goods into North Korea, both Koreas are heavily de­pendent on sea routes, increasing transportation costs and de­lays. Furthermore, the international environment, especially political factors, is extremely important for inter-Korean economic cooperation. The most crucial element is the relation­ship between North Korea and the United States. There are various issues concerning multilateral exports control and re­striction over strategic goods governed by the U.S. Export Administration Regulations (EAR) and exports of goods made in the North. Also, North Korea since it was designated by the United States as a terrorist-sponsoring country, cannot receive financial support from international financial organizations. If the general conditions that hinder further facilitation of inter­ Korean economic cooperation are not improved, it will be dif­ficult to revitalize economic cooperation businesses in the pri­vate sector.

Prospects for Inter-Korean Economic Cooperation

Despite such difficulties, economic cooperation between the two Koreas must be consistently pursued while multilateral efforts continue to resolve the North Korean nuclear issue. It is an imperative to ensure smooth operation of the three main in­ter-Korean economic cooperation projects, which have been the driving force behind South-North relations.

These projects are cooperation in the agricultural and fish­eries industries; joint development of mineral resources and cooperation in maritime activities as have been recently agreed upon between the two sides; and infrastructure projects such as such as cooperation in the energy sector in case of the settle­ment of the nuclear issue. South Korea will consult with North Korea over issues such as full-scale operation of railways and roads, normalization of sea transportation and opening up of new direct air routes in order to reduce distribution costs and improve transit procedures. These have been cited as impedi­ments to further expansion of inter-Korean economic coopera­tion. Along with the revision of the Inter-Korean Exchange and Cooperation Law on May 3, the government will review administrative procedures to simplify transit procedures.

Although humanitarian aid to North Korea will continue, more fundamental measures should be used in order to enable North Koreans to improve their livelihood and become self-sufficient. In this regard, agricultural and fisheries cooperation, agreed upon at the last Inter-Korean Ministerial Talks, will be centered on facilitating development by improving North Korea’s productivity and infrastructure. Since 2000, North Korea has been trying to make fundamental changes in their economic system. It has introduced economic reform mea­sures, adopted new incentives, and implemented a family ­based farming system.

To achieve success in inter-Korean economic cooperation, it is important for South Korea to observe the directions of such changes taking place in North Korea, further stimulate positive changes, and devise ways to vitalize economic coop­eration. From a mid- and long-term perspective, it seems time­ly to search for new ways that can wards that help restore and develop the North Korean economy. Considering that the lack of human and intellectual resources is a main barrier to mak­ing North Korea an international market economy, it is neces­sary for South Korea to actively engage in nurturing human re­sources in North Korea. It is extremely difficult to develop the North Korean economy with the existing administrative prac­tices and economic system, which limits cooperation.

In order to enhance living conditions of North Koreans and create a cross-border economic community, it is necessary to restore and create new industrial infrastructures. Expanding support for the establishment of North Korean infrastructure means not only securing infrastructure for a unified Korea, but also improving the environment for South Korean businesses’ investment in North Korea. Likewise, South Korean compa­nies can seek mutually beneficial ways to prosper. In addition, international capital. technology and markets are necessary for developing North Korea’s economy. North Korea must induce active international cooperation and assistance by creating a favorable environment. It must also focus on fulfilling the standards set by the international community. North Korea should especially realize that without giving up the nuclear program, it will not be able to develop its economy.

It has been a great experience

-Mr. Michel Jolivet, French Ambassador in Nepal

For many many years I had been dreaming about coming to Nepal and finally I got the opportunity to come here as Ambassador in September 2004. I had always thought of Nepal while traveling to other places in Pacific and South East Asia and I was very glad when I got appointed.

I had always been familiar with many pictures and stories about the Himalayas, Mount Everest and the magnificent natural sceneries. I was driven by the richness of the Nepalese culture, historical places and monuments and religious festivals. Kathmandu valley's historical places were truly impressive.

I have visited lots of places in Nepal besides Kathmandu valley. I have been to Khumbu twice. I have also been to Chitwan, Lumbini, Lamjung, Dhulikhel, Namobuddha, Chitlang South and several times to Pokhara. My visit to Jomsom had to be cancelled because of strong winds. I hope to go to Mustang this autumn. I have fond memories of seeing Bhutanese refugee camps in the far east of the country.

My very recent visit was the trek to Khumbu area. Trekking to Khumbu was indeed one of my old dreams so I decided to take some ten days off my office which was not that easy. My trekking agent was kind enough to organize a very ordinary trek for me. I flew from Kathmandu to Lukla and walked to Pakhdin and then to Namche. From Namche I went to Khumjung which is a very short journey for altitude acclimatization. Then I walked from Khumjung to Dhole and Dhole to Cherabo and from there we went to Gokyo. We had the final ascent to Gokyo ridge at night. Altogether it was a nine-day trip and I was fortunate to be blessed with very beautiful weather: Especially when we reached the top of Gokyo before the sunrise the weather and view were magnificent; not even a single cloud or a mist at all and around 360 degrees of superb panorama of all the high mountains including Cho Oyu, Mt. Everest, Nuptse, Lhotse and Makalu. So I walked amidst this grand view and I really enjoyed.

Finding accommodation in a small Sherpa luggage with well proper bedding, bit of eating at night in the Sherpa way, I just liked it. I was not looking for a five star hotel at such remote place. If you are a trekker or a climber, of course, you do not expect grand comfort at an altitude of more than 4000 meters. It is so cold that you don't have hot shower. I had been training for this trekking for a ' while and being a bureaucrat is lot more challenging. Everything went quite well and I was bit tired by the end. Whether you go to Everest or Gokyo or any other place you have to come back walking. The final leg of your walk was climbing 300 meters to Lukla. But on this last day the weather was little covered and bit cooler. I really appreciated this magnificent mountain, beautiful sceneries Sherpa culture and their way of life and hospitality: And that was really a great experience for me. When I returned, journalists were asking me whether I was feeling safe and I said, of course, it was totally safe. And I' think that nobody in this trek will face any kind of insecurity.

I had no problem while trekking. Nepal receives around 20 thousand French tourists every year and nobody has been robbed or faced any trouble. In times of Bandh, of course, road can be blocked for a day or two but the travel agents are good enough to manage the problems and finding alternative.

My mission will expire in the year 2007 and I have many more plans to visit various places. I hope to go to Mustang soon and trek from Jomsom to Lomanthang. If I have time I also want to trek north of the Annapurna. I hope to fly out to Lhasa and come back by road. May be someday I will be trekking to Kanchenjunga too. I hope I also will be able to go back to Khumbu to climb Island peak, Mera Peak or Kala Patthar, visit Annapurna base camp and south base camp. I would also like to visit Dolpo.

As I am here to work, I actually have to find some additional time for trekking. Even after the tenure I plan to come back and probably become a full-time trekker.

I was really taken aback by the big media coverage of my modest trekking because I am not an athlete. But whatever I did it can be done by so many people; so I wish that other also come and do the same. I have even posted my experience in the official website of the embassy and have admitted that tourist are safe in Nepal. The other day I got an email from a lady from France asking whether it was true that I had trekked and if she could trust on that information, and I said, of course, yes. I hope the people who really want to come to Nepal will follow my modest example.

Text courtesy: The Nepal – Traveller July-August issue 2005. Thanks the NTTR-ed.

Korea’s Policy to Increase Foreign Investment

By Lee Jae-hun, Deputy Minister for Trade and Investment

Importance of Foreign Investment

The importance of foreign direct investment cannot be stressed enough in restoring the vitality of the Korean economy and in transforming Korea into a business hub of Northeast Asia. Foreign investment has not only contributed to helping Korea overcome the 1997 financial crisis, but also played a key role in the sustained growth of the economy. In the course of riding out the crisis, the Korean Government enacted the Foreign Investment Promotion Act to improve investment-related laws and to liberalize foreign exchange management policies. The total amount of FDI stood at $25 billion between 1962 when such statistics began to be kept and 1997. Thanks to increased promotion efforts, Korea has attracted more than $10 billion in foreign investment annually since 1998. Foreign direct investment since 1998 accounted for more than 77 percent of all foreign investment in the past four decades. The number of foreign-invested companies in Korea rose by more than three times from 4,000 to 15,000. Their share in domestic production and export has grown to 15 percent.

Moreover, Korea’s foreign exchange reserves reached $200 billion as of June, up from $3.9 billion in 1997. About 30 percent of this increase is attributed to foreign investment. Not only did the perception of foreign investment change considerably in the process, but the Korean Government also came to learn of FDI s positive impact on the national economy. Still, FDI s share in the GDP remains at about 8 percent, much lower than 35 percent of China. Fourteen percent is the OECD average.

Obstacles of Foreign Investment

Thanks to an all-out effort by the government, foreign investment inflows have grown in both quantity and quality. The amount of investment registered $100 billion at the end of 2004. Furthermore, greenfield investments, particularly in the parts and materials industry, increased. Value-added investments, such as the establishment of R&D centers in multilateral companies and their Asian headquarters, rose sharply. Despite the Government s implementation of the foreign investment promotion policy, FDIs remain relatively low compared with competing nations. This is because there are still some outstanding factors that are making foreign investors hesitate. Also, foreign investors have not yet sensed the various improvement measures that the Korean government has carried out.

When it comes to Korea s investment environment, the Korean government is working to further improve related infrastructures, such as education, transportation, housing and medical services for foreign investors and their dependents. In terms of the business environment, some of the factors that have hindered foreign investment include labor relations and the lack of liberalization in financial, medical, and legal services. Also, the lack of public consensus on building an open society, and the absence of systems and infrastructure work to the disadvantage of attracting foreign investment.

Investment Destination

Korea has many strong points as an investment destination. First, Korea has excellent human resources. Approximately 40 percent of Korea s population has completed higher education. According to OECD statistics, Korea s labor skills, R&D capacity, and productivity are some of the highest in the world. Korea is also among the top when it comes to sharing major industries in the global market. Both shipbuilding and TFTLCD account for 44 percent of the global market, the highest anywhere. Semiconductors and petrochemicals rank third, digital home appliances fifth, and steel and automobiles sixth.

Korea is also an IT powerhouse. It has the highest penetration rate of high-speed information network among OECD members. The percentage of Internet users is the second highest in the world, and Korea s airports, sea ports and communications infrastructure are outstanding. The strategic location of the country also works to its advantage. Situated between China and Japan, Korea serves as the gateway to the Northeast Asian market. Being both a competitor of Korea and a large potential market, China is an approximate market for foreign companies that already have presence in Korea. Korea is the central base for foreign companies that wish to make inroads into China. Korea, China and Japan are currently discussing ways to promote cooperation in Northeast Asia, including a possible free trade agreement.

When such efforts become more tangible, Northeast Asia will emerge as one of the world s largest economic blocs.

Foreign investment is critical for Korea to achieve sustainable economic growth. As a result, the Korean Government has continuously reformed legal systems and eased regulations on business activities. To attract foreign investment, Korea created Invest Korea, an investment promotion agency. In collaboration with related ministries and regional authorities, Invest Korea provides onestop services for investors. The agency assigns a project manager and implements a system that enhances post-investment and marketing support, which will help encourage existing investors to increase their investments in Korea. Moreover, Korea has introduced a variety of incentives. First, tax reduction is available to foreign investors in high-tech industries, R&D and industry-support sectors. For such investors, corporate taxes are exempted for up to seven years and tariffs are waived on capital goods imports.

Foreign firms with large-scale investments are designated as a foreign investment zone and entitled to various incentives, such as tax reduction and free lease on industrial sites. Moreover, the Cash Grant was recently introduced so that foreign firms investing in high-tech industries are rewarded. They receive cash payments in direct proportion to their investments. Incentives, however, only have limited effects and the key to promote FDI is creating an environment where foreigners would feel at home while living and doing business in Korea. In this context, the Korean Government announced a five-year plan last year to improve living and working conditions for foreigners. To improve the business environment, 49 tasks

have been identified in areas of labor, taxation, banking, foreign exchange, and administration, among others. To create better living conditions, 102 tasks have been identified in areas such as education, housing, medical service, transportation, immigration, and culture. For example, to address education concerns, a top priority for foreign investors, a first-rate foreign school will open in August 2006 in Yongsan, Seoul, with financial backing from the government. In addition, for the convenience of foreign investors, Incheon International Airport is operating a separate customs clearance desk to facilitate entry and exit procedures. Foreigners-only hospitals will also open to provide better medical services.

Various steps are being taken to stabilize labor-management relations, a major concern for foreign investors. A special task force has been established within Invest Korea to support labor-management relations. The labor sector becomes more active in promoting relations with the businesses while participating in overseas IR missions.

Due to a tradition of militant behaviors in labor movements and high-profile labor disputes that attract media attention, Korea s labor-management relations have been viewed negatively overseas. Contrary to popular belief, however, only 11 percent of Korean workers are labor union members, and the media portrayals often fail to correctly reflect the reality of labor in Korea.

Conclusion

History shows that countries that enjoyed rapid growth invariably pursued strategies that favored openness and competition. For Korea to emerge as an advanced trading nation, it is essential to attract foreign firms with cutting-edge technologies. In this regard, Korea will actively respond to trade liberalization issues, such as the Doha Development Agenda and free trade agreements. It aims to create a favorable business climate for foreign-invested firms. The Korean Government will continue to address difficulties that foreigners may experience while working and living in Korea. It endeavors to create more positive atmosphere for the foreign community.

It is true that Korea has until recently focused on increasing the amount of foreign investment. In the future, the vision will shift toward qualitative growth. In line with government strategies to develop domestic industries and balanced national development, efforts will be made to attract foreign investment in future growth industries: R&D, logistics and service sectors. To stabilize labor-management relations and correct tarnished image overseas, a variety of programs are being studied and implemented through consultations among representatives of unions, businesses and government authorities. Invest Korea will come up with various measures to make it easier for foreigners to do business in Korea. In short, the Korean Government aims to make sure that foreign companies here become successful, so that investments will continue to grow.

Tourism Planning for Gorkha

By Maheswor Bhakta Shrestha, Tourism Management Consultant, Kathmandu

1. Why Tourism in Gorkha Historically famous Gorkha offers the widest topographical variations, from 288 metres in the south to 8163 metres Manaslu peak in the north. Gorkha is the only district, connecting Terai region to alpine Tibetan plateau. In this titled land, only 9% of the area is arable land where 79% of 288,000 people survive in subsistence farming. No wonder, Gorkha is the 23 rd poorest districts of Nepal (ICIMOD Indicators of Development).

Due to the widest topographical variations, Gorkha district offers the greatest biological, ecological and cultural/ ethnic diversity- a unique product for development tourism, which can offer an alternative source of employment and income for the local people.

Planning for tourism in Gorkha is for economical benefit of alternative employment for the locals, environmental conservation and to reinstate the historical glory.

2. Present state of Tourism in Gorkha

Most foreign tourists visit north Gorkha Manaslu area, which is opened since 1991. Some 8,100 trekkers have visited since then, and contributed about $ 2.14 million trek permit fees at US $ 90 per week. In the past decades, some 500 mountaineers in 55 expeditions attempted the peaks of Manaslu, Himalchuli and Ganesh Himal of Gorkha, thereby generating employment for 3500 people and royalty of Rs.41 million to the government.

Visitors to Gorkha Durbar/ Kali temple and Manokamna temples in the south are in the order of 10,000 persons and 450,000 pilgrims respectively, thereby generating Rs.5 million per annum in the 4 hotels of Gorkha bazaar and Rs. 240 million in

Manokamana, including Rs.100 million from cable car ticket sales. The economic significance of tourism in these three areas of Gorkha now adds up to over Rs.245 million plus the amount spent by trekkers and mountaineers. How the local people and environment are benefiting from this visitor movement is a topic of study.

3. Planning for Tourism Planning is the "designing of a desired future and of effective ways of bringing it about". The Gorkha District Development Plan 2059 ranked tourism as the third highest priority area for district development, after agriculture and infrastructure. The main objectives of tourism in the plan are to Integrate efforts of all sectors, Distribute benefits of tourism to rural areas, and Preserve cultural, archeological and historic heritages. To achieve these objectives, the Plan has plans to involve private sector in tourism development, preserve historic, religious, natural and cultural sites; and to develop joint programs with neighboring districts.

The plan however, lacks to integrate programs for mountain tourism in north Gorkha, or to integrate activities of Manaslu Area Conservation Project (MCAP). Any tourism plan for Gorkha should design separate programs to promote mountain tourism in north Gorkha, soft trek and cultural tourism in middle Gorkha and historical, religious pilgrimage and archeological tourism in south Gorkha. These three areas have different tourism products to attract different clientele coming from different market sources. Due to low literacy (19%) in the north, the government has to develop infrastructure and enthuse local entrepreneurs to provide quality tourist services.

4. Issues in Planning for Tourism in Gorkha

The general issues for tourism planning include an integrated approach for development, benefit sharing with the locals for sustainability of projects, and a scheme of resource sharing between locals and outside agencies. Tourism projects should share outside expertise and investment with local materials and human resources.

Area specific planning issues include the opening of Syar Khola valley in north Gorkha for tourism activity, aerial access to the north with a STOL port at Prok in order to lengthen trekking season beyond September- November period; and to adress the fragile ecological and cultural sensibilities of the area. Middle Gorkha offers unique features for the soft adventure and cultural treks around scenic view- points (Sirenchowk, Ajirkot, Upallokot, Sirandanda, Dharche, Barpak Dnada etc.) and famous Gurkhas heart land of Barapak, Kharibot, Siranchok etc. There are ideal places to develop model villages and pilgrim treks to Dudh Pokhari, Narad Kunda etc.

South Gorkha offers the historic heritage of Nepal, Royal Goddess Kali temple, Prithbi Park and traditional bazaar experience, the Nepal's most famous pilgrimage to goddess Manokamna and village experience around it. A tourism development plan of Gorkha can be very well integrated with those of the famous tourism circuit of Kathmandu- Gorkha- Pokhara-­Lumbini- Chitwan in central Nepal. (Condensed from a paper presented on June 12, 2005 at Nepal Tourism Board. Shrestha is aviation, tourism and management consultant and can be reached at

(atmconsult@wlink.com.np.). Thanks the NTTR June 20 - 26, 2005 and the author: ed.