Doing business in south korea
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Doing business in south korea Presentation Transcript

  • 1. Doing Business in South Korea By: Mohamed Mousa By: Mohamed Mousa
  • 2. Agenda 1 South Korea Information 2 Introduction about investments in South Korea 3 Political Status Political Status 4 Consumer Price Index - - CPI Consumer Price Index CPI 5 Inflation Inflation 6 Dross Domestic Product - -GDP Dross Domestic Product GDP 7 Employment / /Unemployment Rate Employment Unemployment Rate 8 Waeges Waeges 9 Business Freedom Business Freedom
  • 3. Agenda (Cont.) 10 Trade Freedom 11 Fiscal Freedom 12 Government Spending Government Spending 13 Monetary Freedom Monetary Freedom 14 Investment Freedom Investment Freedom 15 Financial Freedom Financial Freedom 16 Property Rights Property Rights 17 Freedom from Corruption Freedom from Corruption 18 Labor Freedom Labor Freedom 19 Six Reasons to Invest in South Korea Six Reasons to Invest in South Korea 20 Conclusion Conclusion
  • 4. South Korea Information • • • • • • Area 100,210 km2 Population 48,875,000 Density 491/km2 Administrative divisions 16 Currency WON 1 US Dollar = 1,119.95 South-Korean Won
  • 5. Introduction about investments in South Korea
  • 6. Consumer Price Index - CPI
  • 7. Inflation
  • 8. Gross Domestic Product - GDP The Gross Domestic Product (GDP) in South Korea expanded 0.70 percent in the third quarter of 2010 over the previous quarter, and a great GDP expansion of 3.2 on the last quarter of 2009 happened, so that is great evidence why YES to invest.
  • 9. Gross Domestic Product – GDP (Cont.)  GDP real growth rate: 6.1% (2010 )  country comparison to the world: 0.2% (2009 )  2.3% (2008 )  GDP- Per Capita (PPP) (This entry shows GDP on a purchasing power parity basis divided by population as of 1 July for the same year).     $30,200 (2010 ) country comparison to the world: $28,500 (2009 ) $28,500 (2008 ) note: data are in 2010 US dollars  GDP – Purchasing Power ability     $1.467 trillion (2010 ) country comparison to the world: $1.383 trillion (2009 ) $1.38 trillion (2008 ) note: data are in 2010 US dollars
  • 10. Political Status  South Korea has a stable government with sustainable democracy and a healthy infrastructure.  The relationship between North Korea and South Korea is strained and is a source of political and social controversy
  • 11. Employment / Unemployment  Population = 48,875,000 Unemployment Rate = 3.5 Employment Rate = 23.7
  • 12. Employment Rate The employment rate in South Korea expanded 23.6 percent in the last three years, and the employment rate is growth , so that is great evidence why YES to invest.
  • 13. Unemployment Rate
  • 14. Wages • Employment at one company can mean an average monthly salary of 5 million won ($ 4,360) whereas another company will offer a salary of over 8 million won ($8,000) USD. Finding up-to-date numbers for average Korean salaries is a challenge. It may be most efficient for you to discuss pay with a potential employer right off the bat so you know your financial situation. Bear in mind that the cost of living in Korea is lower compared to most other countries. Minimum wage Gross annual wage (Intl. dollars) 4,110 South Korean won per hour, reviewed annually 10,955
  • 15. Business Freedom Business freedom is a quantitative measure of the ability to start, operate, and close a business that represents the overall burden of regulation as well as the efficiency of government in the regulatory process.
  • 16. Trade Freedom Trade freedom is a composite measure of the absence of tariff and non-tariff barriers that affect imports and exports of goods and services.
  • 17. Fiscal Freedom Fiscal freedom is a measure of the tax burden imposed by government. It includes both the direct tax burden in terms of the top tax rates on individual and corporate incomes and the overall amount of tax revenue as a percentage of GDP.
  • 18. Government Spending This component considers the level of government expenditures as a percentage of GDP.
  • 19. Monetary Freedom Monetary freedom combines a measure of price stability with an assessment of price controls. Both inflation and price controls distort market activity. Price stability without microeconomic intervention is the ideal state for the free market.
  • 20. Investment Freedom The Index evaluates a variety of restrictions typically imposed on investment.
  • 21. Last Free Trade agreements  After more than three years of negotiations, South Korea and the EU officially signed a free trade agreement on October 6 2010.  If the trade pact is ratified by both parliaments, the agreement would take provisional effect on July 1 2011. We believe South Korea’s aggressive pursuit of free trade agreements will boost the investment environment and growth potential.  On the whole, South Korea has 27 of such agreements in various stages of preparations (concluded, under negotiation, proposed) and we expect the country’s move towards increasing trade and investment liberalization to bring considerable benefits to its economy, bolster the business environment and boost growth prospects.
  • 22. Foreign direct investment - FDI  Foreign investment in South Korea was tallied at $654.2 billion as of the end of last year, up 21.3 percent from a year earlier, the Bank of Korea (BOK) said.  Also, securities investment, which accounts for most foreign investment in South Korea, rose 14.6 percent to $357.3 billion, while direct investment grew 12.5 percent year-on-year to $118 billion.  Stock investment by foreigners reached $276.4 billion as of the end of 2006, up 10.8 percent from a year earlier, while bond investment rose by 29.8 percent to $80.8 billion.
  • 23. Foreign direct investment - FDI (Cont.)  The South Korean government allows the following general incentives for foreign investors:  Cash grants for the creation and expansion of workplaces for hightech business plants and R&D research centers;  Reduced rent for land and site preparation for foreign investors;  Grants for establishment of convenience facilities for foreigners;  Reduced rent for state or public property; and  Preferential financial support for investing in major infrastructure projects.
  • 24. Financial Freedom Financial freedom is a measure of banking efficiency as well as a measure of independence from government control and interference in the financial sector.
  • 25. Property Rights It measures the degree to which a country’s laws protect private property rights and the degree to which its government enforces those laws.
  • 26. Freedom From Corruption Corruption breaks down economic freedom by introducing insecurity and uncertainty into economic relationships.
  • 27. Labor Freedom The labor freedom component is a quantitative measure that looks into various aspects of the legal and regulatory framework of a country’s labor market. It provides crosscountry data on regulations concerning minimum wages; laws inhibiting layoffs; severance requirements; and measurable regulatory burdens on hiring, hours, and so on.
  • 28. Labor force By occupation Agriculture 8%, Industry 19%, Services 73%
  • 29. Annual Working Hours •South Korea is the Highest in annual working hours per worker. •The labor market is somewhat inflexible which can be burdensome for private companies.
  • 30. Six Reasons to Invest in South Korea 1- Stocks Are Cheap and Trending Higher 2- The South Korean Economy is Growing Solidly 3- Inflation is in Check 4- The Currency is Undervalued 5- The South Korean Government’s Balance Sheet is Solid 6- South Korea is on the Verge of a Promotion.
  • 31. Six Reasons to Invest in South Korea 1. 2. 3. Stocks Are Cheap and Trending Higher:South Korea currently trade for less than 10 times forward earnings and less than one times sales, on average. And the only thing better than cheap stocks are cheap stocks with positive momentum on their side. The South Korean Economy is Growing Solidly: Based on estimates from The Economist and International Monetary Fund, South Korea’s GDP is likely to grow by at least 5.75% this year 2010 and more in 2011. Inflation is in Check: Consumer prices were only up 2.6% in July, year-over-year. But the Bank of Korea (BOK) is already on the scene to prevent inflation from topping 4%. In fact, the bank announced a surprise interest rate hike to 2.25% in July 2010.
  • 32. Six Reasons to Invest in South Korea 4. 5. 6. The Currency is Undervalued: Any way you look at it, the South Korean won is undervalued relative to the U.S. dollar. In fact, Barclays estimates the discount at approximately 35%. Meanwhile, The Economist’s Big Mac Index pegs the discount around 20%. Even if stock prices stagnate, we can profit from an appreciating currency. The South Korean Government’s Balance Sheet is Solid: Unlike some countries, South Korea didn’t overeat at the debt buffet. Public spending only accounts for about 25% of GDP, compared to 115% in Greece and 192% in Japan. Moreover, the country is enjoying a current account surplus, thanks to strong exports, particularly of semiconductors and automobiles. South Korea is on the Verge of a Promotion: As MSCI (MSCI is a leading provider of investment decision support tools to investors globally ) put it, South Korea “continues to meet most developed markets criteria… notably economic development, market size and liquidity.”
  • 33. Conclusion Yes we are going to invest in South Korea
  • 34. THANK YOU!