A European multinational company interested in foreign direct investment (FDI) and for FDI the company shortlisted two countries i.e. 'X' and 'Y'. These companies has little knowledge about FDI policy of 'X' and 'Y' ther

Considering 'X' and 'Y' as Korea and Thailand respectively for analyzing the FDI policy for this European multinational. Korea The Korean government maintained distinctive foreign investment policies giving preference to loans over direct investment to supplement its low level of domestic savings during the early stage of industrialisation. Korea's heavy reliance on foreign borrowing to finance its investment requirements is in sharp contrast to other countries. The Korean Government had emphasised the need to enhance absorptive capacity as well as the indigenisation of foreign technology through reverse engineering at the outset of industrialisation while restricting both Foreign Direct Investment (FDI) and foreign licensing. This facilitated Korean firms to assimilate imported technology, which eventually led to emergence of global brands like Samsung, Hyundai, and LG. The Korean government pursued liberalised FDI policy regime in the aftermath of the Asian financial crisis in 1997-98 to fulfil the conditionality of the International Monetary Fund (IMF) in exchange for standby credit. Several new institutions came into being in Korea immediately after the crisis. Invest Korea is Korea's national investment promotion agency mandated to offer one-stop service as a means of attracting Foreign Direct Investment, while the Office of the Investment Ombudsman was established to provide investment after-care services to foreign-invested companies in Korea. These are affiliated to the Korea Trade Investment Promotion Agency. Korea enacted a new foreign investment promotion act in 1998 to provide foreign investors incentives which include tax exemptions and reductions, financial support for employment and training, cash grants for R&D projects, and exemptions or reductions of leasing costs for land for factory and business operations for a specified period. One of the central reasons for the delays in the construction process in Korea is said to be the lengthy environmental and cultural due diligence on proposed industrial park sites. (OECD, 2008). Thailand Thailand followed a traditional import-substitution strategy, imposing tariffs on imports, particularly on finished products in the 1960s. The role of state enterprises was greatly reduced from the 1950s and investment in infrastructure was raised. Attention was given to nurturing the institutional system necessary for industrial development. Major policy shift towards export promotion took place by early 1970s due to balance of payments problems since most of components, raw materials, and machinery to support the production process, had to be imported. On the FDI front, in 1977 a new Investment Promotion Law was passed which provided the Board of Investment (BOI) with more powers to provide incentives to priority areas and remove obstacles faced by private investors. After the East Asian financial crisis, the Thai government has taken a very favourable approach towards FDI with a number of initiatives to develop the industrial base and exports and progressive liberalisation of laws and regulations constraining foreign ownership in specified economic activities. The Alien Business Law, which was enacted in 1972 and restricted majority foreign ownership in certain activities, was amended in 1999. The new law relaxed limits on foreign participation in several professions such as law, accounting, advertising and most types of construction, which have been moved from a completely prohibited list to the less restrictive list of businesses. To sum up, between Korea (X) and Thailand (Y), company should look for Korea as a market which has established it as an Export Led Manufacturing base for the world providing great ease in doing business and trading across borders. If company want to export to world markets, Korea is an attractive destination with low cost supply of steel and other allied eco-system for manufacturing and exports. Thailand has focused on import substitution and a service driven economy aimed at promoting employment and equitable wealth distribution. Choice is that of the company concerned where it wants to invest, manufacturing or services.