COUNTRY

RISK
ANALYSIS:
SOUTH
KOREA
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Submitted By:

Himanshu Raj (4494)

Kulein Chauhan(4662)

Parth Tuli (4950)

BBS 3FB

OBJECTIVE OF STUDY

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The main objective behind the preparation of this project is to get a deep
understanding of the investment scenario in South Korea and to assess the
attractiveness of South Korea as an Investment destination.

Contents

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1. Country Profile: South
Korea…………………………………………5

2. Economy Of South
Korea………………………………………………6

3. Political Risk in South

Korea……………………………………………8

4. How to Start a Business in South

Korea………………………………9

5. Latest Developments in India-South Korea Trade

Relations…………………………………………………………………
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 SOUTH KOREA: COUNTRY PROFILE IN A NUTSHELL

CAPITAL CITY SEOUL

OFFICIAL LANGUAGE KOREAN

GOVERNMENT TYPE PRESIDENTIAL REPUBLIC

POPULATION 48,875,000 (2010 Estimate)

POPULATION DENSITY (per sq. km.) 491/km2

AREA (Total) 100,210 km2

GDP (PPP)

TOTAL $1.457 trillion (2010 estimate)

PER CAPITA $29,790 (2010 estimate)

GDP (NOMINAL)

TOTAL $986.256 billion (2010 estimate)

PER CAPITA $20,165 (2010 estimate)

CURRENCY SOUTH KOREAN WON

MAJOR INDUSTRIES Shipbuilding, Automobile,

Construction, Electronics and
Armaments etc.

MAJOR CORPORATIONS OF SOUTH Daewoo Group, Hyundai Group, Kia

KOREA Motors, LG Group, Lotte Group,
POSCO and Samsung Group.

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 ECONOMY OF SOUTH KOREA

South Korea has a market economy which ranks 15th in the world by
nominal GDP and 12th by purchasing power parity (PPP), identifying it as one
of the G-20 major economies. It is a high-income developed country, with an
emerging economy, and is a member of OECD. South Korea is one of the
Asian Tigers, and is the only developed country so far to have been included
in the group of Next Eleven countries. South Korea had one of the world's
fastest growing economies from the early 1960s to the late 1990s, and South
Korea is still one of the fastest growing developed countries in the 2000s,
along with Hong Kong, Singapore, and Taiwan, the other three members of
Asian Tigers. South Koreans refer to this growth as the Miracle on the Han
River.[7] Having almost no natural resources and always suffering from
overpopulation in its small territory, which deterred continued population
growth and the formation of a large internal consumer market, South Korea
adapted an export-oriented economic strategy to fuel its economy, and in
2009, South Korea was the eighth largest exporter and tenth largest
importer in the world.

Despite the South Korean economy's high growth potential and apparent
structural stability, South Korea suffers perpetual damage to its credit rating
in the stock market due to the belligerence of North Korea in times of deep
military crises, which has an adverse effect on the financial markets of the
South Korean economy. However, renowned financial organizations, such as
the International Monetary Fund, also compliment the resilience of the South
Korean economy against various economic crises, citing low state debt, and
high fiscal reserves that can quickly be mobilized to address any expected
financial emergencies. South Korea was one of the few developed countries
that were able to avoid a recession during the global financial crisis, and its
economic growth rate will reach 6.1% in 2010, a sharp recovery from
economic growth rates of 2.3% in 2008 and 0.2% in 2009 when the global
financial crisis hit.

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South Korea was a historical recipient of official development assistance
(ODA) from OECD. throughout the 1980s until the mid 1990s, South Korea's
economic prosperity as measured in GDP by PPP per capita was still only a
fraction of industrialized nations. In 1980, the South Korean GDP per capita
was $2,300, about one-third of nearby developed Asian economies such as
Singapore, Hong Kong, and Japan. Since then, South Korea has advanced
into a developed economy to eventually attain a GDP per capita of $30,000
in 2010, almost thirteen times the figure thirty years ago. The whole
country's GDP increased from $88 billion to $1,460 billion in the same time
frame. In 2009, South Korea officially became the first major recipient of ODA
to have ascended to the status of a major donor of ODA. Between 2008 and
2009, South Korea donated economic aid of $1.7 billion to countries other
than North Korea. South Korea's separate annual economic aid to North
Korea has historically been more than twice its ODA.

The domestic economy appears to have stabilized since mid-2009. Moreover,

despite the increased volatility witnessed since tensions started to rise
between the two Koreas in May 2010, the won has been broadly appreciating
against both the US dollar and the Japanese yen since April 2009. Recent
dovish statements from the Ministry of Strategy and Finance (MOSF) and the
Bank of Korea (BOK, the central bank) have, however, provided a reminder
that the economy is still far from healthy. Particular concerns include the fact
that, while the economy avoided a technical recession, South Korea is
suffering from a jobless recovery. A failure to bring down the unemployment
rate would result in social unrest. The GNP is, however, unlikely to lose its
position in power.

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 POLITICAL RISK IN SOUTH KOREA

Political Risk: Low

• South Korea has a stable government with sustainable democracy and a

healthy infrastructure. There is still some need for deregulation to improve
efficiency.

• The labor market is somewhat inflexible which can be burdensome for

private companies.

• The relationship between North Korea and South Korea is strained and is a
source of political and social controversy.

HOW TO START A BUSINESS IN SOUTH KOREA

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Introduction

It is still a mystery to a number of people in the west especially when it

comes to starting a business in South Korea. As the eleventh biggest
economy in the world South Korea offers numerous business opportunities.
This article will cover various procedure and paperwork that is required to
start a business in South Korea.

Checking out Trade Name

Any entrepreneur willing to start business in South Korea first has to take a
trade name certificate. This certificate process only takes a day and
availability can be checked with the Supreme Court website. There is
absolutely no charge for checking the availability of the company name, only
condition is that no other organization is running the same business in same
city or South Korean term 'Kun'.

Making the Seals

The next in line is getting the seals and other paperwork done for the
company. In case of an entrepreneur they can use their personal seal. It is
similar to sole proprietary firm in United Kingdom and United States.

Incorporation of the company

Next step in starting a business is to incorporate the company by registering

it with the registrar of the company department. The notarization process
often takes a day and company has to show the total capital more than 10
million Korean wan.

Next is Opening the Bank Account

The promoters starting a business in South Korea next need to open the
bank account and deposit complete subscription amount in lieu of the share
they are subscribing in the company.

Paying the Corporate Registration Tax

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The corporate registration tax varies in different areas of South Korea. The
basic components of corporate registration tax are - capital registration tax,
education tax, railroad bond tax and registration tax of Supreme Court
Stamp.

Registration with District Tax Office

To start the business operation an entrepreneur has to register their

business with local tax office and get a commencement of business
certificate. This process often takes 20 days and each business will be issued
a tax identification number and VAT number.

Filing Public Health Insurance Program

Companies with more than one employee need to register themselves with
National Insurance Program.

Finally the company has to submit the rules of employment to the office of
Ministry of Labor in South Korea. This process only takes a day and company
has to submit the proof of accident insurance in case they are hiring more
than 10 employees.

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LATEST DEVELOPMENTS IN INDIA-SOUTH KOREA TRADE
RELATIONS

 Bilateral trade between India and South Korea grew to US$ 15.6 billion
in 2009 from US $ 2.6 billion in 2002.
 South Korea and India signed an ambitious free trade agreement called
Comprehensive Economic Partnership Agreement that slashes tariffs,
encourages investment and promotes exchange of skills in a bid to
double fast growing commerce over the next decade between two of
Asia’s biggest economies.
 India and South Korea are also working towards a civil nuclear deal.
India is in talks with South Korea for the supply of nuclear fuel as South
Korea is a member of 45-nations Nuclear Suppliers Group.

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