Welcome foreign capital, but fear tech outflow

Welcome foreign capital, but fear tech outflow

More than half of Koreans view foreign capital in a positive light despite harboring some fears of technological leakages and threats to managerial rights of local firms, a survey showed yesterday.

Earlier this month, the state-run Korea Development Institute conducted a survey of over 1,000 Koreans prior to opening yesterday's forum on the impact of foreign capital on the local economy.

The results found 65 percent of the respondents saying that foreign presence in Asia's fourth-largest economy is "positive."

They cited technological improvement and tightened corporate governance standards as the largest contributions by foreign investors.

"The survey shows that most Koreans are aware of the positive impacts of the foreign presence on the economy," the report said.

But at the same time, the survey showed that Koreans are concerned that an increased foreign presence may lead to technological leakages and hostile takeovers.

Vice Finance Minister Kwon Tae-shin played down these fears, saying that "foreign investment is a vital element for rejuvenating investment and improving economic productivity."
Members of academia appeared to be more accommodating to foreign capital, as more than two-thirds of scholars and experts surveyed separately were positive toward foreign investment.

Despite their sentiment, more than 90 percent of the respondents said they approved of the recent tax probes into foreign funds.

Furthermore, the think tank said in a separate report that there is no clear evidence that foreign presence has helped improve corporate governance.

"Most foreign investment in Korea takes the form of portfolio investments, and they mainly focus on retrieving capital gains," the report said.

The report also said there has been the impression that foreign-owned financial institutions, local banks in particular, have improved a lot in financial and risk management.

But it said, "We cannot find any viable evidence that (the foreign) presence in the financial sector is a great help toward improving management systems and other skills."

Foreign investors tend to demand high dividends, but their investments have usually led to an increase in corporate earnings, the report said.

"The foreign investors' demand for high dividends is not so big as to deter corporate spending," the report said, adding that corporate regulations are a big obstacle toward corporate expenditures.