[Yoon Seok-yeol Impeachment] Must Actively Respond to Crisis Management for 'Foreign Investment Expansion and Exchange Rate Stability'

Business Community’s Expectations for the New Government
Foreign Investment Down 9% After Martial Law
Soaring Won-Dollar Exchange Rate Increases Corporate Burden
Attention on Fate of Commercial Act Amendments and Other Key Issues

On the 4th, the Constitutional Court decided to dismiss President Yoon Seok-yeol, bringing an end to the emergency martial law and impeachment phase that lasted about four months. The business community expects that with the early presidential election leading to the launch of a new government, uncertainty will be shaken off and the economy will be revitalized. In particular, there is a strong desire for the new government to actively address pressing issues such as the recovery of foreign investment, exchange rate stabilization, resumption of external negotiations, and the passage of key bills.

A dealer is working in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul, on the 3rd, when the Trump administration imposed a 25% reciprocal tariff rate on Korea. On that day, the KOSPI opened at 2,437.43, down 68.43 points (2.73%) from the previous day, the won/dollar exchange rate rose 4.4 won to 1,471.0 won, and the KOSDAQ started at 670.75, down 14.10 points (2.06%). 2025.4.3 Photo by Jo Yong-jun

Top Priority: Foreign Investment and Exchange Rate Stabilization

Companies ranked the recovery of foreign investment and exchange rates as their top expectations from the new government formed through the early presidential election. Foreign investment in our market sharply declined recently due to the declaration of emergency martial law in December last year, the impeachment phase of the sitting president, and the uncertain export market following the inauguration of the Trump administration in the United States.

According to the ‘Foreign Direct Investment (FDI) for Q1 2025’ announced by the Ministry of Trade, Industry and Energy on the 3rd, the reported amount was $6.41 billion, down 9.2% compared to the same period last year. This is the first decrease in Q1 FDI in six years since 2019 (-35.7%). As foreigners refrained from spending in our market, the won-dollar exchange rate rose sharply, burdening Korean companies. As of the morning of that day, the won-dollar exchange rate fluctuated between the low 1470 won range and the high 1460 won range, showing the possibility of surging to the 1500 won range. This is close to the 1483.5 won level seen in March 2009 during the financial crisis. The high exchange rate raises concerns about increased production costs due to rising raw material prices, as many of our industries manufacture products using imported raw materials for export. While export prices may gain competitiveness in overseas markets and sell well, if the rise in production costs exceeds that, Korean companies could suffer significant losses in the long term. The high exchange rate could also lead to a domestic market slump caused by inflation. This is why companies cite exchange rate stabilization as the top priority issue for the new government to resolve.

Hope for Relief in External Negotiations Including U.S. Relations

Companies anticipate that the new government’s launch will rebuild the control tower and ease the bottleneck in external negotiations. Since the start of the emergency martial law and impeachment phase, Korean companies have had to go abroad on their own, without government support, to meet key figures and plead that despite political situations, our economy has no problems. In particular, multiple attempts were made to contact the Trump administration, which imposed a reciprocal 25% tariff on Korea the day before, but these efforts were unsuccessful. Business community insiders said, "Above all, it was difficult because we could not confirm whether our appeals were properly conveyed to President Trump." With the president suspended from duty, it was difficult to find anyone in both the business community and government who could directly meet President Trump. The delegation to the U.S. led by Choi Tae-won, Chairman of the Korea Chamber of Commerce and Industry (and SK Group Chairman), managed to meet U.S. Secretary of Commerce Gina Raimondo three hours before her inauguration ceremony on February 21 to convey the positions of Korean companies. Hyundai Motor Company announced a $3.1 billion investment plan in the U.S. at the White House last month, but it is evaluated that no practical benefits were gained from the tariff measures announced by the U.S. government. Attention is focused on whether these difficult situations can be resolved as the new president meets and communicates with world leaders.

There is also analysis that the possibility of successfully hosting the Asia-Pacific Economic Cooperation (APEC) summit, scheduled for late October in Gyeongju, Gyeongbuk, has increased. The APEC meeting will also hold a separate business event, drawing great interest from the Korean business community. About 1,700 businesspeople from around the world will attend and meet with Korean businesspeople through events such as the CEO Summit to discuss cooperation plans. The Korea Chamber of Commerce and Industry is responsible for preparing the CEO Summit. The Chamber expects that the APEC meeting will bring about an economic effect of approximately 7.4 trillion won to Korea.

Amendments to the Commercial Act and Other Issues in the Hands of the New Government

The business community is also closely watching the direction of various economic issues that are receiving great attention domestically. The fate of these issues is expected to vary greatly depending on who is elected as the new president and what kind of government is formed. The amendment to the Commercial Act, which expands the duty of loyalty of corporate directors from ‘the company’ to ‘the company and shareholders,’ was passed in the plenary session led by the Democratic Party but was returned to the National Assembly due to the exercise of the veto power by Acting Prime Minister Han Duck-soo. When it is later resubmitted to the government, the implementation may change depending on who the president is. Other issues drawing attention from the business community include the progress of the ‘Semiconductor Special Act,’ which concerns whether semiconductor R&D personnel are exempt from the 52-hour workweek, the construction of the ‘Semiconductor Cluster’ currently being developed in Yongin City, and the ‘Tax Law Amendment’ that changes the taxation method from inheritance tax to acquisition tax.