Dr. Ahn participated in 2012 World Investment Forum, Dohar, as a speaker and panelist.

The following is the remakrs of Dr. Ahn at the Ministrial Round Table, World Investment Forum;

Remarks by Dr. Choong-Yong Ahn, Foreign Investment Ombudsman,

Korea

At the Ministerial Round Table on Investment Policy Framework for Sustainable and Inclusive Development, World Investment Forum 2012, Doha, Qatar, April 22, 2012

Mr. Chairman, Distinguished Ladies and Gentlemen,

I would like to begin my presentation by thanking UNCTAD for inviting me to this great conference to share some important Korean experiences.

At present, cross-border investment liberalization and facilitation are crucial for economic recovery, especially considering the uncertain world economic outlook, and for sustainable world development. Against this backdrop, the negative consequences of ISDs are likely to exacerbate the downside risk of the world economy and should be minimized. In this respect, aftercare service functions for existing foreign companies in host economies deserve special attention and should be viewed as important as how to settle legally filed investor-state disputes through arbitration mechanisms. In the case of Korea, 95 bilateral investment and tax treaties have gone into effect so far. However, not a single ISD case has yet occurred. Among other things, Korea’s aftercare service functions for foreign investors under the Ombudsman system have contributed to keeping the grievances raised by foreign investors from escalating into ISDs. By providing preemptive aftercare services for foreign companies, Korea has been able to induce reinvestments from foreign companies, which have accounted for more than 50 percent of annual inbound FDI in the past six years.

During my years as the Ombudsman for the past six years, my office has succeeded in revising 90 cases of acts and decrees necessary to resolve the grievances of foreign investors and has also resolved 350 cases of minor grievances via administrative actions annually through intra-governmental coordination and business consultations by civilian experts in my office. I believe that the aftercare service function is a core element of the sustainable IIAs and also an effective alternative dispute resolution method. Our Russian colleague has already reported that Russia recently introduced an ombudsman system to induce FDI into Russia. In fact, high-ranking officials from 12 UNCTAD member countries visited my office three years ago to get acquainted with the grievance resolution process. Korea would be delighted to share with UNCTAD member countries how its Ombudsman system has operated to produce an alternative resolution mechanism and a more business-friendly environment. 

In order to foster a predictable investment environment, regulatory transparency and reform must also be pursued. As the civilian Chair of Korea’s Regulatory Reform Committee (RRC), which largely consists of civilian experts, I am delighted to report that the Committee serves as a rational deterrent to prevent bureaucratic expansionism from increasing its influence. In so doing, Korea’s RRC considers global best practices and legal coherence with international investment and free trade agreements when reviewing new and strengthened regulations while providing sufficient advance notification and a comment period by various stakeholders.

To cultivate domestic and global business managers, a number of MBA programs in Korea have been developed by the government as well as private sector initiatives. These programs are often linked with MBA programs of the U.S. and the EU. Also, Korea’s free economic zones intend to establish profit-making academic institutions.

In pursuit of sustainable development, Korea has initiated a green growth model as a new growth engine by enacting the Green House Carbon Trading System, to be effective in 2014, to reduce voluntary carbon emission by 30% although Korea belongs to the Kyoto Protocol Annex II countries. Korea also has been active in inducing targeted foreign investors, which have expertise in CDM, solar, wind power and green industries. Furthermore, Korea established the Global Green Growth Institute (GGGI) to share knowledge with UNCTAD members and work together on green growth initiatives.

For job creation, cross-border investment for tourism deserves special recognition. For example, East Asia expects to see rapid growth in air-travel tourists. Given the high employment-generation effects of the tourism sector, UNCTAD may take a serious look at the economic impact of expanding open-sky agreements with low-cost carriers for cross-border FDI in the tourism sector.

For inclusive development, a combination of SME capacity building with venture start-ups is critical to using cross-border multi-tiered production fragmentation in the emerging globalization trend. In this regard, collaborations among academia, government, private R&D institutes and business should be highly encouraged. Global alliance projects with multinational companies need to be encouraged, as does the Korea Trade-Investment Promotion Agency (KOTRA). These collaborations allow university professors to incorporate venture start-ups with his/her researchers. This has been further accelerated by institutionalizing the KOSDAQ market, in which venture companies can list their shares.

The issue of corporate social responsibility (CSR) is a new challenge for multinational investors. The Ombudsman’s office intends to emphasize that foreign investors can engage in human capital formation projects through a win-win framework. To take advantage of the global value chain, special emphasis must be given to human capital. In this context, CSR by foreign investors could be designed to nurture human resources by offering on-the-job training programs or managing joint programs in the form of academia and industry collaborations rather than simply giving away to those in need.

Thank you very much for listening.