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Korea—Change of leadership could lead to better investment climate

Korea’s snap election could pave the way for greater transparency and a more competitive business environment.

The impeachment of Park Geun-hye by the constitutional court has created a leadership vacuum and with it political uncertainty. Moon Jae-in, the former leader of the opposition and a liberal, is the current favourite to win the Presidential election that must be held before May 9.

Moon is in favour of reforming Korea’s chaebols, which have dominated the economy over the last 50 years. The chaebols are often accused of crony capitalism, with many deals concluded on secretive terms. A more competitive business environment and increasing transparency would be a positive for foreign investment into Korea. Australia’s investment portfolio in Korea was worth A$15b as of 2015, equivalent to 1% of total investments abroad. This share is well below Korea’s share of goods and service exports from Australia in FY16 (6% of total exports, or A$20b).