AmCham: "Korea's Business Environment 'Below Average'... Political Uncertainty Also a Burden"

Political Uncertainty and Overlapping Regulations Shake Corporate Confidence
Regulations in Pharmaceuticals, Automotive, and Digital Sectors Serve as Market Entry Barriers

In a survey conducted by the American Chamber of Commerce in Korea (AMCHAM), nearly half of the respondent companies rated South Korea's business environment as "below average." Additionally, 57.8% of respondents indicated that government policies had a negative impact on their business. The political uncertainty that intensified following the martial law incident in December last year was also identified as a factor increasing concerns among domestic and foreign companies.

AMCHAM officially published the "2025 Domestic Business Environment Insight Report: APEC Special Edition" on the 8th, containing these findings. This report was released shortly after the U.S. Trade Representative (USTR) announced its "Country-Specific Trade Barriers Report," drawing attention as a strategic resource to respond to changes in the Korea-U.S. trade environment.

The report covered over 70 regulatory issues across 12 industry sectors, including aerospace, automotive, pharmaceuticals, digital economy, and energy.

Many of these issues remain unresolved or have recently emerged as new challenges. AMCHAM analyzed that South Korea's regulatory environment does not meet global standards or acts as overlapping regulations, emphasizing the urgent need for policy improvements to enhance market accessibility for foreign-invested companies.

Importance of Regulatory Competitiveness Highlighted Following 25% Reciprocal Tariff Announcement

Amid the Trump administration's announcement of a 25% reciprocal tariff policy, AMCHAM pointed out that South Korea must strengthen regulatory competitiveness and create an environment where global companies can compete fairly.

The report noted that as interest in trade technical barriers (TBT) in the U.S. rises again, Korea's unique domestic regulations are effectively restricting U.S. companies' market entry.

In particular, the pharmaceutical/medical devices, chemical substances, automotive, and digital economy sectors were identified as representative problem areas. In the pharmaceutical sector, complex approval procedures, opacity in drug price evaluations, and delays in innovative drug market entry were cited as major obstacles.

Chemical substance regulations were evaluated as excessively complex and stringent compared to advanced countries, making market access difficult. In the automotive sector, environmental and safety regulations were found to disadvantage U.S. companies, while in the digital economy, restrictions on cross-border data transfers and regulations targeting specific companies were analyzed as hindering fair competition.

The report also mentioned that Korea-U.S. trade is expected to reach an all-time high in 2024, with the U.S. emerging as South Korea's largest export market. However, political uncertainty has increased since the martial law incident in December last year, expanding concerns among U.S. companies about the business environment.

James Kim, Chairman of AMCHAM, stated, "Although the trade environment has become more complex, trust in the Korea-U.S. economic partnership remains strong," adding, "This report will serve as a practical guideline for South Korea to establish a regulatory environment that meets global standards and maintain competitiveness as a stable investment destination for U.S. companies."

AMCHAM views the Asia-Pacific Economic Cooperation (APEC) summit to be held in Korea this October as a strategic turning point, evaluating that Korea has an opportunity to emerge as a center of innovation and sustainability in the Asia-Pacific region.