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Foreign investors should not be taken for granted

ANY COUNTRY trying to attract foreign investment should not neglect those investors who have already arrived and are making a contribution to the national economy, because the competition for investment is tougher than ever. So argues Seok Soong Seo, the ambassador of the Republic of Korea to Slovakia.

Ambassador Seok Soong Seo(Source: Jana Liptáková)

ANY COUNTRY trying to attract foreign investment should not neglect those investors who have already arrived and are making a contribution to the national economy, because the competition for investment is tougher than ever. So argues Seok Soong Seo, the ambassador of the Republic of Korea to Slovakia.

“Please, do not take it for granted that foreign investors will always be here,” says the Korean ambassador, who among other things has a detailed knowledge of Slovakia’s tourism offering – especially its spas, their characteristics, water temperature and even how much they cost to visit. He believes there are spas in Slovakia that could attract and satisfy foreign tourists.
The Slovak Spectator spoke to Seok Soong Seo about the potential for health tourism in Slovakia and the interests of Korean investors in Slovakia, as well as the cultural ties between the two nations.

The Slovak Spectator (TSS): The city of Yeosu is hosting the World Expo between May 12 and August 12, although Slovakia is not participating in it. What benefits does hosting such an event bring to your country?
Seok Soong Seo (SSS):
I could list some statistical data about how many new jobs we have created or what improvements have been made to our infrastructure thanks to the Expo, but it would be only one of the factors. It also helps to spread Korea’s good name abroad. If we go back to 1988 many European countries did not even know that South Korea existed, but that year we hosted the Summer Olympic Games, which helped to create a positive emotional bond with our country. In six years we will host the Winter Olympic Games, in Pyong Chang, again, it will be a chance to send out positive signals about Korea’s international standing and achievements.

TSS: The Free Trade Agreement between the EU and Korea became effective in July 2011. How has this agreement affected bilateral trade between Korea and Slovakia so far?
SSS:
Of course there have been efforts to review the effect of the agreement after the first anniversary of it being put into practice, but frankly speaking we are still in the early stages to fully assess the effects since a great deal of the ground-breaking regulatory provisions have yet to be implemented. In order to get an initial sense of how the agreement has worked [one can look at] EU-Korea figures over the nine months from July 2011 to March 2012 compared to the same period two years ago when, for example, exports to Korea increased by 35 percent. Duties were dropped on about one third of EU exports to Korea since July last year and sales of these goods have increased by 46 percent. Yet, overall, we talk about almost €2 billion in new trade and €350 million saved in duties. As for specific examples of export growth, [trade in] pork, for example, went up by almost 120 percent while [trade in] leather bags is up by 90 percent.

As for Korea, due to the crisis exports to the EU have dropped overall by 3.6 percent but exports of preferential goods have increased by 16.5 percent. Nevertheless, there is a significant amount of investment flowing to Korea, while FDI from the EU to Korea has increased by 60 percent for three consecutive quarters since July last year.

TSS: How would you assess current economic relations between the Republic of Korea and Slovakia, also with respect to the economic crisis and the current situation in the eurozone? Have you registered any changes, either positive or negative, within the bilateral trade relationship?
SSS:
It is a rather tough question because we do not look at Slovakia as an isolated market, especially since the Slovak domestic market is not that big compared to the amount of production or the capacity of some Korean investments.

So we view Slovakia as part of the European market. For example, if we take the carmaker Kia, when geared up to its maximum capacity, then it produces a good-looking car every single minute, but only 5 percent of that production goes to the Slovak market. Samsung produces a 3D hi-tech television every 30 seconds, but less than 3 percent of this production is consumed in Slovakia. We have to look at the Slovak market in a much wider context. Of course the European crisis has negatively impacted Korean investments, especially in the segment of electronics where our investors have faced hardship and difficult times. Though the Olympics are starting in London and we are expecting some increasing numbers, we are still in the doldrums, trying to make it through difficult times.

TSS: Slovakia is becoming one of the favourite health tourism destinations in the region. You have visited almost all the spas in Slovakia. How do you assess the country’s health tourism potential? Would Koreans find this area of tourism interesting?
SSS:
A couple of years ago, the average Korean perhaps routinely confused Slovakia with Slovenia, and for them Bratislava would have sounded too long a name to remember. But this has been improving, of course. We do not have the exact numbers about Korean visitors to Slovakia mostly because they only pass through Slovakia and your country is not their final or main destination. Korean tourists spend perhaps half a day in Bratislava and then return to Vienna or Budapest. This is quite a serious problem for Slovakia’s tourism industry. Perhaps they should pose the question of how to make the tourists aware of a number of fascinating sites that are here in Slovakia. With the existing model of travelling, Korean tourists can hardly include Slovakia’s spas in their busy schedule during those couple hours they spend in Slovakia, and perhaps this needs to be changed.
I could talk volumes about Slovakia’s spas, their characteristics, water temperature, and even costs of stays – and I can say that there are worthy spas in Slovakia that could satisfy foreign tourists. I would mention Podhájska as a good example: they upgraded their facilities and made some investments and you would be surprised how many people are in line there. Of course some spas, such as Piešťany, already have some guests from the Middle East or Russia, but perhaps with a slightly more focused effort more tourists could come from Asian countries, such as Korea, Japan and China as well. But the most important task is nevertheless to make tourists stay in Slovakia longer.

TSS: How would you assess the current interest of Korean investors in Slovakia? Do you believe that the investment potential has been fully tapped?
SSS:
No, I definitely do not want to suggest that the potential is fully tapped. Perhaps one message that I would like to convey to the readers of The Slovak Spectator is that I sometimes do not understand why officials in this country sometimes divide companies [into] 100-percent pure Slovak companies and then foreign investments. To me, Samsung or Kia are Slovak companies as well; for example in Kia foreign capital makes up 30 percent and thus I think that the state should look at these companies like other domestic producers, even when it comes to providing them with assistance, for example.

But back to your question; yes, there is an immense potential. But perhaps before attracting other new investors the country should make sure that they are treating well those investors who are already here because the international competition is rather sharp. Yes, you of course have brand-new greenfield investments but then a very important wisdom I have acquired from my home country is that a large portion of investments are done by the guys who are already in your homeland and this is why it is important to treat them well. Slovakia already has strong competitors: Poland, the Czech Republic, and Romania, Bulgaria, Croatia, Serbia or Slovenia. Even non-EU member countries are sending out some strong signals. Please do not take it for granted that foreign investors will always be here.

In fact, 15 percent of Slovakia’s GDP is created by Korean companies which employ around 30,000 Slovaks. Of course, if you look at the map of Slovakia these investments are concentrated around Žilina, Galanta and Voderady. Still, central Slovakia, Banská Bystrica, Prešov and Košice regions are still an untapped potential, while sectors such as chemical production, research and development, and tourism seem to be promising.

TSS: Is the language barrier significant for Koreans living in Slovakia?
SSS:
No, I don’t think so. Whenever we have a Korean-language speaking contest, you would be surprised how many Slovak talents participate and the level of language proficiency they demonstrate. Of course, the number is still very small. As for the 30,000 employees of Korean companies, we do not give them a hard time [when it comes] to Korean. If there is English proficiency then there is no problem at all. Also, we live here so it should be part of our good manners to try to remember as much as possible from the Slovak language.

In September, Comenius University opens regular undergraduate and graduate courses in Korean studies, which is a significant step to teaching not only the Korean language, but also Korean culture and our way of thinking and philosophy.

TSS: Representatives of Samsung Electronics Slovakia and the Slovak University of Technology and Žilina University in late June signed a cooperation agreement in science, research and education. What does this agreement means for the development of bilateral relations?
SSS:
When you think of research and development, this kind of investment and cooperation between two technical universities could match the government’s efforts to increase investments in this area. This is not the type of project that shows immediate results; you cannot expect that in three months 3,000 Slovaks will work there. But it will definitely be linked to the creation of new jobs in the future. Besides, Kia and Samsung as well need research and development and they need talented people because they are not just Korean companies.

TSS: Not only Korean investments but also culture has become more visible in Slovakia. Your embassy holds cooking competitions and visitors to Bratislava Castle were able to attend a traditional Korean wedding as part of the Korean National Day. How do Slovaks respond to Korean culture?
SSS:
In September, we will have a Korean food contest, which will be attended not only by the Korean community but by more than 20 hotel academies from all over Slovakia, starting with Bratislava, Nitra, Piešťany and Lučenec, who will all compete in preparing Korean food. It has a symbolic importance, of course, because it shows what linkages traditions and cultures can create. Yet this is only one aspect of our cultural activities and connections.

There are already strong bridges between Slovaks and the Korean community here. We do not want to live here as strangers or even as guests who come and go: this is our second home and we do want to contribute in many ways. Since I will end my diplomatic mission here this year, it will be very difficult to say goodbye to this beautiful country and its lovely people.

Topic: Foreigners in Slovakia


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