HEDGING RISKS by cuiliqing

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									                                                                                                   No. 101


Overview of Insurance Sector
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                                                  Dear Friends,

                                                  As many of you who have been in Korea for a couple of years
                                                  may be aware, Chuseok is one of Korea’s most largely celebrated
                                                  holidays. It is a time when families and friends gather to share
                                                  food and enjoy their time together, giving thanks to their ancestors
                                                  for the year’s bountiful harvests.

                                                  This year, Korea’s representative traditional holiday of Chuseok
                                                  falls on October 3 rd of the solar calendar. It will last three days,
                                                  from October 2 nd to 4 th and falls on a weekend this year. It is
                                                  a prime opportunity for foreigners to tour Korea’s cities and
                                                  experience Korea’s culture while all the bustling crowds are
                                                  away visiting family relatives.To all the readers (Korean and
                                                  foreigners), I would like to convey my best wishes for Chuseok.

                                                  Aptly enough, starting this month, we have made significant
                                                  changes to the design and layout of your favorite magazine.
                                                  While not many changes have been made to the contents (and
                                                  the high standards will be maintained), we hope this new format
                                                  of Infomag, which is aesthetically pleasing, will meet your

                                                  The Cover Story of this issue takes a look at the Insurance
                                                  industry. There is no doubt that Korea’s insurance industry has
                                                  experienced many changes in recent years. Today, it faces a host
                                                  of challenges ranging from low interest rates, sluggish growth, and
                                                  an aging population to intense cross-sectoral competition.

                                                  The In Focus section analyzes the World Bank’s annual report
                                                  measuring the ease of doing business. Korea ranked 19 th out of
                                                  183 countries climbing four steps higher than last year’s 23 rd. This
                                                  year’s ranking is also the nation’s highest ever.

                                                  For Infomag Talk we met with Minister of Strategy & Finance
                                                  Yoon Jeung-hyun, who explains his priorities and strategies.
                                                  The ministry oversees the daily economics of the public, and
                                                  is committed to the advancement of the domestic economy
                                                  and establishment of growth dynamics through effective policy
                                                  coordination, fair tax systems, public enterprise reform, and
                                                  systematic distribution of national resources, efficient budget
                                                  management and active international cooperation.

                                                  On the lighter side, the Feature section brings you Lee Yang-
                                                  won, an artist who made major contributions to the development
                                                  of contemporary Korean art with his portraits, landscapes and
                                                  wildlife paintings.

                                                  Hope you like this new format of Infomag. If you have any
                                                  comments, please feel free to contact us.

Jean Marie Hurtiger
The European Union Chamber of Commerce in Korea

CONTENTS                                                 October 2009 No. 101

Editorial                                            6              24
Informer                                            14
Policy decisions, latest statistical projections,
business and cultural news that counts

Infomag Talk                                        24

Minister of Strategy & Finance

Advertorial                                         30
World Bank-IMF Meeting

Cover Story                                         32
Insurance Industry in Korea
Basic Facts
EU Regulations

In Focus                                            62
Ease of Doing Business in Korea

Feature                                             74
Balanceable Creatures

Policy Check                                        78
Latest Government Measures

FTA Watch                                           82
FTA Developments

10                                                                              11
CONTENTS                                              October 2009 No. 101

Special Report
                                                 88               78
Committee Watch
Network Club

EUCCK Busan                                     105
Special Reports
Network Club

Spotlight                                       116

Korea Sighting                                  124
Interesting Articles on Korea

Hotel News                                      129
Airline News                                    136

BOD List                                        138

Committee List                                  139

Distribution                                    140

For editorial enquiries or feedback, contact:
euram@eucck.org / Tel. 725-9916
Jean-Jacques Grauhar
The European Union Chamber of Commerce in Korea (EUCCK)
Editor-at-Large. Jee Dong-hoon
Chief Editor. Ram Garikipati
Editor. Yoo Han-seok

Editorial Contributors
Yang Su-kyung / Manager, EUCCK
Yoon Ji-won / Manager, EUCCK

EUCCK Marketing & Advertising
Choi Eun-jin / Manager, EUCCK
Tel. 82-2-725-9994
E-mail. eumarketing@eucck.org
Lee Kwang-soo / Director General
Yeo Hong-il / Senior Manager

EUCCK Head Office
21st Floor, Hotel Kukdo, #310 Euljiro 4-ga, Jung-gu, Seoul 100-849, Korea
Tel. 82-2-725-9880~5 / Fax. 82-2-725-9886

B2 Floor, Paradise Hotel (Main Bldg.), 1408-5, Joong-dong,
Haeundae-gu, Busan 612-010, Korea
Tel. 82-51-744-6711~3
Fax. 82-51-744-6714

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Tel. 33-(0)1-45-01-91-60/62
Fax. 33-(0)1-45-01-91-61

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All In One Communication with TEXT
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Tel. 82-2-2028-2000 / Fax. 82-2-2028-2012 / www.all-1.com

General Manager. Kim Bo-il
Executive Director. Lee Sang-do
Director. Kim Ji-hoon
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Photographer. Hwang Jea-young
Cover Illustrator. Shin Hye-kyung

Printing & Processing by EAP
Tel. 82-2-2278-6387

Infomag          ,   ,                                                         .
Infomag                                           .

The European Union Chamber of Commerce in Korea (EUCCK)
21st Floor, Hotel Kukdo, #310 Euljiro 4-ga, Jung-gu, Seoul 100-849, Korea
Tel. 82-2-725-9880~5 / Fax. 82-2-725-9886 / www.eucck.org

Infomag is published monthly by All In One Communication


Korea Receives More Foreign                                                     Korean Economy Grows 2.6%
Direct Investment                                                               Quarter-On-Quarter
8.0      7.4
                              FDI Trends for 2009

6.0                                                 5.70
                                             5.18                 5.13

        2000   2001    2002    2003   2004   2005   2006   2007   2008   2009
                                                                                Real gross domestic product (chained volume measure of GDP)
* Figures shown in billions of dollars                                          increased by 2.6 percent compared with the previous quarter.
* Figures represent aggregated FDI from January to July                         This is also a 0.3 percentage point upward revision compared with
                                                                                the advance estimates released on July 24th. The GDP estimates
                                                                                released are based on more complete source data from the in-
Foreign direct investment (FDI) pledges have hit their highest                  dustrial production index, service industry activity index, etc than
level in nine years, totaling $6.79 billion for the first seven months           were available for the advance estimates.
of 2009 for a year-on-year increase of 32.4 percent. After a steep                   On the production side, the manufacturing sector increased
drop in the first quarter, FDI rebounded in May and the upward                   8.9 percent, which was mainly due to growth in the majority of
trend remains steady. Enhanced price competitiveness and signs                  sub-sectors including electric and electronics manufacturing and
of a rapid economic recovery are believed to be behind the in-                  transport equipment manufacturing.
crease. Foreign investors are also expressing greater confidence                      Services rose by 1.1 percent as the growth in financial in-
in Korea’s economic growth potential.                                           termediation accelerated and transport & storage and business
     The surge in FDI is especially noteworthy because the global               activities shifted to positive growth. Facilities investment showed
economic recession has depressed FDI in most advanced coun-                     10.1 percent growth, mainly influenced by recovery from its earlier
tries and some emerging markets. A survey of 240 company ex-                    relatively low levels both in machinery equipment and in transport
ecutives from the largest non-financial transnational corporations               equipment.
by the United Nations Conference on Trade and Development
(UNCTAD) found that nearly 58 percent of respondents planned
to cut back investment in 2009.
       Nevertheless, Korea has been receiving positive attention
from international agencies with regard to its future economic
growth prospects. The International Monetary Fund (IMF) recently
                                                                                New Prime Minister and Six
adjusted its economic growth forecast for Korea, predicting the                 Cabinet Members Nominated
economy would contract only 1.8 percent compared with a previ-
ous estimate of 3 percent. The Organization of Economic Coop-
eration and Development (OECD) predicted that of all 29 OECD
member countries, Korea’s economy would rebound at the fastest

The President named Professor Chung Un-chan of Seoul National
University as a new Prime Minister last month.
     In addition, a list of six new nominees for the Cabinet was
announced. They include Lee Kwi-nam, former Vice Minister of
Justice, as Minister of Justice; Kim Tae-young, Chairman of the
Joint Chiefs of Staff, as Minister of National Defense; Choi Kyung-
hwan, Grand National Party lawmaker, as Minister of Knowledge
Economy; Yim Tae-hee, Grand National Party lawmaker, as Minis-
ter of Labor; Paik Hee-young, Professor of the Food and Nutrition
Department at Seoul National University, as Minister of Gender                   Mr. Chung Un-chan, New Prime Minister of Korea

Equality; and Joo Ho-young, Grand National Party lawmaker, as
Minister for Special Affairs.                                                   of ordinary citizens and middle pragmatic way. Notably, three law-
     The focus in the selection process this time was placed on                 makers were chosen to join the Cabinet. The newly created post
whether the nominees would be able to fulfill their duties in a                 of Minister for Special Affairs reflects the strong determination
substantive manner in line with the philosophy of governance of                 of the Administration to facilitate communication and join forces
President Lee, which is embodied by measures for the well-being                 with the ruling party.


Trade Figures for August 2009                                           Foreign Reserves Increase for
                                                                        Sixth Consecutive Month

The Ministry of Knowledge Economy has released its trade figures
for the month of August. The national trade balance totaled $1.7
billion, posting a trade surplus for the seventh consecutive month.
      Exports slid 20.6 percent year on year to $29.1 billion. Export
volume was down across the board, with the exception of LCD de-
vices (up 31.9 percent). Exports to Latin America (down 19.8 per-
cent), the European Union (down 41.3 percent), the Middle East          Korea’s official foreign reserves as of the end of August 2009
(down 30.2 percent), China (down 13.2 percent), the United States       amounted to 245.46 billion dollars. This was an increase of 7.95
(down 13.1 percent), ASEAN countries (down 22.4 percent), Japan         billion dollars from the 237.51 billion dollars total at the end of the
(down 20.7 percent) and Oceania (down 27.3 percent) declined            preceding month (an increase for the sixth consecutive month
during the first 20 days of August.                                      since March).
      Imports totaled $27.4 billion for a decrease of 32.2 percent.           This increase was attributable to the IMF’s allocation of new
Inbound shipments of crude oil (down 45.9 percent), petroleum           Special Drawing Rights (3.38 billion dollars), to a rise in operating
products (down 48.5 percent) and gas (down 55.8 percent) fell           profits on the foreign reserves, to redemptions at maturity of the
from the same period the previous year. Imports of capital and          foreign currency liquidity supplied by the Bank of Korea and the
consumer goods also dropped 17.5 percent and 12.8 percent, re-          Foreign Exchange Stabilization Fund, to an increase in the U.S.
spectively. However, consumer confidence is picking up and this          dollar translation values of euro, Japanese yen and other currency
seems to have slowed the rate of decline.                               assets in line with the stronger exchange rates of those curren-
                                                                        cies against the dollar, and to redemptions at maturity by the Na-
                                                                        tional Pension Service of its currency swaps agreement with the
                                                                        Bank of Korea (0.64 billion dollars).
                                                                              Korea’s official foreign reserves consist of 214.09 billion dol-
Household Spending up 1.7% from                                         lars of securities (87.2%), 26.84 billion dollars of deposits (10.9%),
                                                                        3.47 billion dollars of Special Drawing Rights (1.4%), 0.98 billion
Last Year                                                               dollars of its IMF reserve position (0.4%), and 0.08 billion dollars
                                                                        of Gold (0.03%).

                                                                        hold marked 2,663 thousand won in the second quarter 2009, up
                                                                        1.7 percent from the second quarter 2008.
                                                                             The average monthly income per household recorded 3,299
                                                                        thousand won in the second quarter 2009, which fell 0.1 percent
                                                                        from the second quarter 2008. The real income declined 2.8 per-
                                                                        cent from the second quarter 2008.The regular income rose 1.1
                                                                        percent, while the non-regular income fell 24.0 percent.
                                                                             The average monthly consumption expenditure per house-
                                                                        hold marked 2,071 thousand won in the second quarter 2009,
                                                                        which rose 1.4 percent from the second quarter 2008. The aver-
                                                                        age monthly non-consumption expenditure per household was
                                                                        593 thousand won in the second quarter 2009, which rose by 2.9
                                                                        percent from the second quarter 2008.
                                                                             The average monthly disposable income per household was
                                                                        2,706 thousand won in the second quarter 2009, falling 0.7 per-
The average monthly income per household amounted to 3,299              cent from the second quarter 2008. The surplus went down by 6.9
thousand won in the second quarter 2009, down 0.1 percent from          percent to 636 thousand won and the surplus rate decreased by
the second quarter 2008. The household expenditure per house-           1.6% point to 23.5 percent.

18                                                                                                                                                19

National Energy Saving Efforts                                        ‘Sheriffs’ Recruited to Fight
Paying Off                                                             Hackers

Korea is seeing good progress in its efforts to conserve energy by    More than 3,000 “cyber sheriffs” will be appointed to protect com-
reducing standby power levels. Standby power is the energy an         puter systems from acts of online terrorism like the distributed
electrical product consumes when it is switched off, and Korea’s      denial-of-service attacks that hit the country two months ago, the
national goal is to reduce the level of standby power for all elec-   government has announced.
trical products to 1 watt by 2010.                                          The new plan also calls for the National Intelligence Service
     In the meantime, the Ministry of Knowledge Economy has           to be in charge of overall countermeasures against such attacks,
set intermediate goals for targeted products including televisions,   coordinating with the private sector or other governments.
computers, monitors, printers, multifunction printers, set-top box-         The Korea Communications Commission will handle identify-
es and microwaves. Under a new labeling program, products that        ing and eliminating so-called zombie computers as well as warn-
exceed the Ministry’s recommended standby power levels must           ing the public about the threat these compromised computers
carry a yellow warning sticker.                                       pose. It will also make regulations more compatible with cyber
     As of July 2009, 4,580 electrical products met the Ministry’s    protection measures. The Ministry of National Defense will be in
intermediate goals regarding standby power, compared with only        charge of training the “cyber defense command” by next year.
2,418 at the end of 2008. This represents an 89.4 percent jump.             The cyber sheriffs will be computer experts including those
The most dramatic improvement was observed among printers,            who have excelled at “hacking competitions” from as early as
which saw an almost threefold increase in the number of power-        their teens. Information sharing and analysis centers will also be
saving models on the market. Companies are working actively to        set up in certain industries such as shipping and automobiles to
develop technology in this area and are voluntarily cutting produc-   prevent information from leaking during a hacking attack. In addi-
tion of items that use high levels of standby power. Consumers        tion, programs on cyber safety will be set up at select universities.
are also doing their part, showing a preference for power-saving
products when they are available.
     If the current positive trend continues, Korea can expect to
save nearly 56.2 billion won (about $45 million) worth of energy
every year.                                                           The Korean military will have a difficult time maintaining a desired
                                                                      level of manpower over the next several years, as the number of
                                                                      men subjected to the draft continues to fall and the term of the
                                                                      service shortens.
                                                                           According to the Military Manpower Administration, an agen-
                                                                      cy under the Ministry of National Defense that manages service-
Fewer Men, Shorter Service Hits                                       related issues, the draft rate in the Korean armed forces could fall
Draft                                                                 from more than 94 percent last year to 93 percent this year.
                                                                           The draft rate refers to the percentage of soldiers currently
                                                                      in service, in relation to the number of soldiers that the military
                                                                      requires each year. The administration’s target for the minimum
                                                                      draft rate is 93 percent.
                                                                           According to the administration, the draft rate reached over
                                                                      97 percent in 2005 but has fallen every year since then. It esti-
                                                                      mates that the figure could bounce back up to 95 percent by
                                                                      2012 but may not attain the 2005 – level in the near future.
                                                                           The Defense Ministry estimates that the number of healthy
                                                                      Korean men who turn 20 in a given year, and thus become eligi-
                                                                      ble for service, will continue to decline. There are 275,000 healthy
                                                                      men who turn 20 this year, or about 92 percent of the 300,000
                                                                      active members that the military requires. The ministry estimates
                                                                      that the eligible men will peak at 328,000 by 2012 and then will
                                                                      drop to 248,000 by 2021.


First Korean Satellite Fails                                            Death Rate of AI Gets Higher

After seven delays, South Korea’s first space rocket lifted off the
launch pad on August 25th, but failed to place a scientific satellite
into precise Earth orbit.
       The Ministry of Education, Science and Technology said on
26th of August that while the first and second stage rockets of the
Korea Space Launch Vehicle-1 (KSLV-1) separated as planned af-
ter liftoff from the Naro Space Center at 5 p.m. on 25th of August,
one of the two fairings covering the satellite did not fall off prop-
       Only one fairing was ejected 216 seconds after launch with
the other section remaining in place until the Science and Tech-
nology Satellite-2 (STSAT-2) separated from the second stage            A South Korean man infected with the Influenza A (H1N1) virus
rocket 540 seconds into the flight, the ministry in charge of the        has died, bringing the local death toll from the contagious disease
country’s science and technology policies said.                         to seven, South Korea’s health authorities said.
                                                                             The 78-year old man, who has long suffered from high blood
                                                                        pressure, hepatocirrhosis and other diseases, was presumed to
                                                                        have died from complications stemming from the new flu on Sun-
                                                                        day, according to the Ministry of Health and Welfare.
                                                                             The exact cause of death was still under investigation, the
President Lee’s Scholarship                                             ministry said.
                                                                             Also, an 8th patient who was 64-year-old female died on Sep-
Foundation Launched                                                     tember 16th.
                                                                             According to the ministry, the man was confirmed as being
                                                                        infected with the Influenza A virus on September 12th, after show-
                                                                        ing symptoms of high fever and coughing.
                                                                             The first outbreak of the new flu in South Korea was reported
                                                                        in early May, and the first fatality from the disease was reported
                                                                        on August 15th. A total of 7,576 confirmed flu infections were re-
                                                                        ported across the nation as of September 10th, according to the

                                                                        A foundation handling President Lee Myung-bak’s donated wealth
                                                                        has officially been launched and is expected to start handing out
                                                                        scholarships early next year, according to the foundation officials.
                                                                             The president donated KRW 33.2 billion, or over 90 percent
                                                                        of his lifetime savings, in July under a campaign pledge to give
                                                                        all of his personal wealth back to society with the exception of a
                                                                        house for his family after his retirement.
                                                                               “The foundation will offer various scholarship programs that
                                                                        best conform to President Lee’s intentions. It will work to make
                                                                        sure as many children and students as possible will receive ben-
                                                                        efits,” foundation head officer, Song Jeong-ho said.


Construction of Taekwondo Park                                         Park Breaks Salary Record for
Begins                                                                 Korean Football

Ground was broken here for the world’s first taekwondo park,           Park Ji-sung will become the first Korean football player to receive
which the government hopes will become a Mecca for the nearly          over 7 billion won per season. The three-year deal with Manches-
70 million practitioners of the Korean martial art worldwide.          ter United is reportedly worth £3.64 million (7.2 billion won, $5.98
       Hundreds of people from around the country and abroad           million) per season. The midfielder’s new deal is a 30-percent in-
came to this city in North Jeolla Province, about 240km away           crease on his previous contract of £6.2 million with the Red Devils
from Seoul, to attend a ceremony marking the event. Among them         and will run through June 30, 2012.
were Prime Minister Han Seung-soo and International Olympic                  With Park’s current contract set to expire at the end of the
Committee members Moon Dae-sung and Phillip Walter Coles, of           current season, the English Premier League’s defending champi-
South Korea and Australia, respectively.                               ons entered contract talks with Park’s representatives, JS Limited,
      The 2.31 million square meters park is scheduled to be com-      late last month. Manchester United officials had decided to delay
pleted in 2013, and will feature a 5,000-seat stadium, exhibition      contract negotiations earlier this year.
halls, training facilities, a research center, a graduate school and         The Myongji University graduate signed his first professional
an academy, government officials said.                                  contract with J-League’s Kyoto Purple Sanga in 2000 for 400 mil-
                                                                       lion won and his value has steadily improved over the years. He
                                                                       received a lot of attention after playing on the right wing under
                                                                       Guus Hiddink during the 2002 World Cup. He went on to play for
                                                                       Dutch club PSV Eindhoven under Hiddink for 840 million won.
Yang Stuns World with First Korean                                           After helping the team reach the semifinals of the 2004-05
                                                                       UEFA Champions League, Park caught the eye of Manchester
PGA Championship Victory                                               United manager Alex Ferguson. He signed with the English club
                                                                       for 2 million in 2005, and his salary with the Red Devils has in-
                                                                       creased every year.

                                                                       Korean golfer Yang Yong-eun, 37, made history by becoming the
                                                                       first Asian player to win the 91st PGA Championship golf tourna-
                                                                       ment at Hazeltine National Golf Club in Chaska, Minnesota on
                                                                       August 16th (USA time).
                                                                            Yang, having beaten the world’s number one golf player Tiger
                                                                       Woods, savored his Wanamaker Trophy. The PGA Championship
                                                                       was the last major tournament of the year.
                                                                            Yang was initially trailing behind Woods by two shots. He
                                                                       later added one eagle, two birdies and two bogeys, achieving an
                                                                       8-under 280 strokes, beating Woods, who later lost by three shots,
                                                                       scoring 5-under 283. In third place were England’s Lee Westwood
                                                                       and Northern Ireland’s Rory McIlroy, both with three under par.
                                                                            Up till now the best performance by a Korean golfer at a
                                                                       major tournament was made by Choi Kyung-ju, who came in third
                                                                       place at The Masters Tournament in 2004. This time he reached
                                                                       24th place with 3-over 291 strokes.

                                                                       The news articles have been compiled from korea.net

Infomag Talk             Fundamentally Strong


                                                       Developing and
                                                       advanced economies,
                                                       including Korea, are
                                                       showing signs of
                                                       bottoming in response
                                                       to massive financial
                                                       and fiscal stimulus
Minister of Strategy & Finance Yoon Jeung-hyun

26                                                                             27
Infomag Talk              Fundamentally Strong

                                                                                                   What are your views on the health of the Korean                  effectiveness of job policies including job creation in the
                                                                                                   economy? By when do you expect it to fully                       service industry, start-up promotion and manpower training
                                                                                                   turnaround?                                                      to meet industry demand.
                                                                                                                                                                         Fourth, to ease the burden on low-income earners and
                                                                                                   The fundamentals of Korea’s economy are sound compared           small business owners who are hit hardest by the economic
                                                                                                   to other economies. Korea’s financial sector is relatively       recession, the Korean government will continuously support
                                                                                                   healthy and measures for bank nationalization have not           them.
                                                                                                   been taken. The nation holds sufficient foreign reserves
                                                                                                   and external debt structure is improving since September,
                                                                                                   2008. As of the end of June 2009, Korea holds $ 231.7 bil-       According to recent report by economic thinktanks,
                                                                                                   lion, equivalent to the amount of current payment for 7.4        the Korean economy is falling into a “low growth trap”
                                                                                                   months, exceeding $ 185.8 billion of current foreign debt (as    due to a continuing fall in consumption and investment.
                                                                                                   of the end of the 1st quarter of ‘09). External debt has also    The view is that country should first enhance private
                                                                                                   decreased from $ 422.5 billion in Sept. ‘08 to $ 380.1 billion   spending to help jumpstart the economy instead of
                                                                                                   in March ‘09. Plus, Korea is more fiscally sound than major       increasing budget allocations and public expenditure.
                                                                                                   economies.                                                       What is your view?
                                                                                                        If you compare the consolidated central government
                                                                                                   balance (to GDP %, IMF Jul. ‘09): (Korea) 2.1 (US) 13.5           Although we experienced economic downturn in the 4th
                                                                                                   (Japan) 10.3 (UK) 11.6 (G20 average) 8.1                         quarter of last year due to the global economic crisis, the
                                                                                                        At the same time, the Korean government is carrying         economy is now bouncing back faster than other countries.
                                                                                                   out corporate restructuring in the public and the private        Once recording negative growth in the fourth quarter of last
                                                                                                   sectors to address remaining unsoundness and inefficiency.        year, Korea’s economic growth turned positive in the first
                                                                                                   It is too early to tell when the Korean economy will make        quarter of this year. Further, the economy increased 2.6%
                                                                                                   a full recovery as uncertainty remains high. But we predict      from previous quarter in the second quarter of this year.
                                                                                                   that the economy will grow further from previous quarter in      However, it is the government driving the economic growth
                                                                                                   the second half of this year and post growth rate close to       through expansionary fiscal and easy monetary policies,
                                                                                                   the potential growth rate next year.                             while consumption and investment in the private sector re-
                                                                                                                                                                    main sluggish.
                                                                                                                                                                        The government will maintain its expansionary macr-
                                                                                                   What are the main priorities of the Ministry for the             oeconomic stance for a while, but private consumption and
                                                                                                   second half of this year?                                        investment will be the key to steady economic growth. And I
                                                                                                                                                                    think this applies to other countries around the globe, too.
                                                                                                   Although the Korean economy is projected to grow in the               Therefore, to stimulate private consumption and in-
Minister Yoon at a policy coordination meeting with other ministers
                                                                                                   second half of this year, uncertainty remains high. There is     vestment, the government will create more jobs, support
                                                                                                   a possibility that international financial market could slip     people’s livelihoods, improve business environment and
                                                                                                   into instability again and fiscal space could shrink along       streamline regulations.
                                                                                                   with exchange rate and oil price volatility and H1N1 pan-
The Ministry of Strategy and Finance (MOSF) was estab-                                             demic. Under these circumstances, the Korean government
lished in March 2008 when the Ministry of Finance and                 “Although the Korean         is committed to making every effort to keep robust growth        What steps is the government taking to increase
Economy and the Ministry of Planning and Budget were                                               in the second half of this year.                                 foreign investment in Korea?
merged to establish fair tax systems and efficient fiscal/             economy is projected to          First, until the economy makes a visible recovery, the
economic policies. As the ministry that oversees the daily                                         government will maintain its expansionary macroeconomic          With foreign investment facilitation high on the agenda, the
economics of the public, it is committed to the advance-
ment of the domestic economy and establishment of
                                                                       grow in the second half     stance while aggressively responding to negative factors
                                                                                                   such as real estate market.
                                                                                                                                                                    Korean government is establishing and carrying out meas-
                                                                                                                                                                    ures needed to achieve the agenda. The aim is threefold:
growth dynamics through effective policy coordination, fair
tax systems, public enterprise reform, systematic distribu-
                                                                       of this year, uncertainty        Second, to secure a steady economic recovery driven
                                                                                                   by the private sector, the Korean government will continue
                                                                                                                                                                    to improve investment environment, to upgrade incentive
                                                                                                                                                                    systems and to strategically draw foreign investment. First,
tion of national resources, efficient budget management
and active international cooperation. Playing a pivotal role           remains high.”              to stimulate private consumption and investment.
                                                                                                        Currently, we are exerting strenuous efforts to promote
                                                                                                                                                                    to improve investment environment, Korea will foster a pro-
                                                                                                                                                                    business environment and provide more comfortable living
in the Korean economy, the MOSF has to lead the way in                                             the domestic tourism market, draw more inward tourists,          conditions for foreign investors.
the recovery from the current economic difficulties.                                                improve business environment and boost investment in R&D              Currently, the government is implementing “3-Year Plan
     In an exclusive interview to Infomag, Minister Yoon                                           and new growth engines.                                          for Foreign Investment (’08~’10),” which is aimed at easing
Jeung-hyun explains his priorities and strategies.                                                      Third, for job security, Korea is doing its part to raise   regulations on land use, adjusting the taxation system to

28                                                                                                                                                                                                                            29
Infomag Talk     Fundamentally Strong

the global standards and building more schools and clinics      around the world. For example, we will increase tax credit
for foreigners.                                                 for R&D investment and the deduction rate will be higher
     Second, for foreign investors to use them more ef-         than any other countries in the world.
fectively and efficiently, we will upgrade existing three key         Tax deduction on R&D expenditure: source technology-
incentive systems (e.g. tax cuts and exemption, financial       (large companies) 25%, (SMEs) 35%, new growth engine
benefit and support for land use).                               industry - (large companies) 20%, (SMEs) 30%
     Third, to strategically draw foreign investment, we will         At the same time, we are working to provide more
focus on industries such as high-value added industries in-     comfortable living conditions for foreigners. To upgrade
cluding green growth industry and new growth engines.           education and healthcare environment, the Korean govern-
                                                                ment is building additional international schools and train-
                                                                ing healthcare interpreters.
Do you have any message for European investors?                      Growing foreign investment in our country is the evi-
                                                                dence that foreign investors are feeling positive about Ko-
The European Union is an important economic partner             rea despite the global financial crisis.
for Korea. The EU is now Korea’s biggest foreign investor            FDI (reported between January and July ’09) reached $
and the second largest trading partner with bilateral trade     6.792 billion, a 32.4% year-on-year increase. I appreciate Eu-
volume reaching nearly $100 billion last year. So far, EU’s     ropean investors for making a great contribution to Korea’s
investment in Korea has been playing an important role in       economy and expect to see further growth of European in-
upgrading the nation’s economic system.                         vestment in Korea.
    The Korean government has taken up a number of
measures to make the nation a more attractive investment
destination for foreign investors from Europe and elsewhere

Advertorial          IMF/World Bank 2009 Annual Meeting Special

Korea Financial Investment Association
Most opportune for investing in Korea

Coinciding with the entry of Korea’s stock        China. If Japan investors’ interest in Korean   such as accounts system as well as corpo-
market into FTSE advanced market, the             market get higher in the months to come         rate control structure improvement since
<2009 Korea Capital Market Conference>            through this Conference, the relative impor-    forex crisis, consolidating capital market-re-
held in Tokyo and Shanghai on Sep. 8th and        tance of their investment in Korea which        lated system as the level of advanced coun-
10th respectively, with the theme of “New         is 0.5% level as of the end of 2008 (30.5       tries. Now that restructuring is stimulating
Opportunities & New Challenges” to attract        trillion yen) among Japan entire oversea        activity, the present time is most opportune
long-term investment funds from Japan as          stock investment, is expected to get higher     for investing in Korea’s good corporations
well as China garnered a lot of attention.        greatly.                                        with a relatively low risk, he stressed.
      Under the joint auspices of Korea                  Following the first Tokyo 2009 Korea
Financial Investment Association and Fi-          Capital Market Conference, another large
nancial Services Commission, Republic of          scale ‘2009 Korea Capital Market Confer-
Korea, this 2009 Korea Capital Market Con-        ence’ for Chinese institutional investors was
ference was to acquaint overseas investors        held in Shanghai on Sep. 10th while approx.
with the Korean capital market aggressively       350 China corporate investors from 110
for institutional investors of Japan as well as   China finance institutions related to Korea
China.                                            investment such as China QDII were on
      In the case of the Japan Conference,        hand among high interest.
over 300 Japanese corporate investors from               In China as well, KOFIA CEO Hwang
a total of 136 financial institutions such as      emphasized, “Don’t miss out both oppor-
Naito Securities, Traders Securities and so       tunity and time of Korea investment.”, add-
forth attended it, showing that this Confer-      ing that in particular, Korean stock market
ence was very beneficial for them to be           began to be assessed as an advanced
able to understand comprehensively about          market as can be seen in the case of FTSE
the Korean government’s policy direction.         advanced country index entry.
      From the Korean side as well, a total of           Through his welcoming speech, Am-
40 securities business persons concerned          bassador Shin Jung-seung, Embassy of the
unfolded their brisk investment attraction        Republic of Korea in China, said that both
activities on the spot including Daewoo Se-       Korea and China have overcome the eco-
curities, Daeshin Securities, NH Investment       nomic crisis rapidly thanks to government’s
Securities, and so on.                            swift policy and corporate efforts. At the
      In his opening speech, KOFIA CEO            time when the exchange between capital
Hwang Kun-ho pointed out, “Japan’s in-            market of the two countries enters into a
vestment in Korea is sluggish due to their        full-fledged stage, Shin addressed that he
information shortage of Japanese investors        sincerely hopes for this 2009 Korea Capital
about Korean market.” He stressed that Ko-        Market Conference to serve as a foundation
                                                                                                  KFIA Chairman Hwang opening speech
rea’s growth potential is big in the years to     which bears a visible fruit of capital market
come in the light of the fact that sooner or      exchange of the two nations.
later Korean securities market is expected               Mr. Kim Joo-hyun, standing commis-
to be entered into MSCI advanced country          sioner of Financial Services Commission,
index too following FTSE advanced country         encouraged Korea investment by explaining
index entry this month.                           that Korea heightened market transparency
      Vice chairman Rhee Chang-yong,
Financial Services Commission, also diag-
nosed through his keynote speech, “Dif-
ferently from the-then-1997 forex crisis,
Korea’s real economy is in good health and
capital market also is a stage which leaps
both quantitatively and qualitatively.” He
said that Korean government will support
aggressively by attaching the most priority
on market and corporation so that global
investors can enjoy their result.
      The investment scale of Korean stocks
of Japan entire fund capital is no more than
one-tenth when compared with the U.S and          2009 Korea Capital Market Conference            Conference Spot scene

32                                                                                                                                                 33
Cover Story

Hedging Risks

The international        Premium Challenges   / 34
financial environment
is undergoing rapid      Getting the
changes, ever since      Basic Facts Right    / 48
the financial meltdown
last year. Amidst such   Block Exemption
dramatic changes,        Regulation           / 58
the Korean insurance
industry is also

34                                               35
Cover Story

              There is no doubt that
              Korea’s insurance

              industry has
              experienced many
              changes in recent

                                       The Korean insurance industry is proceeding towards glo-
              years. Today, it faces   balization to meet world standards, becoming more open
                                       by pursuing sound and transparent business management,
              a host of challenges     and toward full-fledged premium liberalization and relaxed
              ranging from low               However at the same time, there are concerns that hav-
                                       ing become an advanced market, the insurance industry is
              interest rates,          showing low signs of saturation. Although the life and non-
                                       life insurance markets are expected to increase, there will

              sluggish growth, and     be limitations for internal growth and thus, market players
                                       must look elsewhere for sources of expansion.
                                             Key issues in terms of market environment are the de-
              an aging population to   clining trend of interest rates and aging of the society. With
                                       interest rates stuck in the single-digits, it is virtually impos-
              intense cross-sectoral   sible to live the silver years off interest income. Yet, against
                                       this low-interest backdrop, Korea continues to age at a
              competition.             pace unmatched by any other country in the world. Experts
                                       forecast that by 2018, the silver population will exceed 14
                                       percent of total national population.
                                             Then there are the cataclysmic changes taking place
                                       on the competition front, which can be summed up as the
                                       bringing down of barriers and competition at global levels.
                                             As barriers between different financial sectors are torn
                                       down, products are sold through diverse distribution chan-
                                       nels. This heats up the competition not only within a single
                                       financial industry, but even between unlike industries.
                                             The rapid aging of society raises interest in life after
                                       retirement, as well as demand for relevant products and
                                       services. This is reflected in the rising popularity of pension
                                       products at each company. Insurers must take the lead in
                                       developing products and services based on thorough analy-
                                       sis on health, livelihood and financial risk of the silver popu-
                                             Long gone are the days where single products and
                                       services were enough to explore and develop markets.
                                       Today, companies look for one-stop shopping of different
                                       types of financial services, ranging from banking, insurance
                                       and stock.

36                                                                                                    37
Cover Story

     Bancassurance, for example, has already successfully
settled in the market, and many more of such changes in
products and services lie ahead. There are controversies ,
here , which we will look at later on.
     In the coming years therefore, the nation’s insurance
industry is expected to undergo a drastic transformation.
Foreign players have increased their presence in the local
market recently but still their businesses have been largely
restricted compared to the banking sector.

     Chronology of
     Insurance Industry

     Insurance businesses in Korea began to take root and
develop in 1962 when three major insurance-related laws
were enacted. In particular, significant improvements in
insurance-related regulations were achieved through the
consolidation of three insurance-related acts into the Insur-
ance Business Act in 1977. The insurance business in Korea
is divided into life, non-life, third-sector (i.e., insurance with
characteristics and features of both life and non-life insur-

      Life Insurance Companies
      The major sources of funds for life insurers include
capital contributed by their shareholders, premiums from
the policyholders, and investment income.
      The Korea Insurance Development Institute (KIDI) es-
sentially set the insurance premium rates until April 2000
when the insurance industry was fully deregulated. The KDI
was set up in December 1989 as a rate-making organization
to succeed the former Korea Non-Life Insurance Rating As-
sociation. It performs the calculation of premiums and other
related functions entrusted to it by the government, insur-
ers, and other insurance-related organizations. Its members
consist of both life and non-life insurance companies.
      Investment assets for most life insurance companies                 General Non-life Insurance Companies                         insurance companies, including 2 foreign insurance compa-         cific risks, to increase individual insurers’ capacity, and to
mainly consist of securities, loans, bank deposits and real               General non-life insurance companies in Korea include        nies and 6 branches of foreign insurance companies.               share liability when losses overwhelm the primary insurer’s
estate. Since the liabilities of life insurance companies are        fire & marine, automobile, and other casualty insurance                                                                             resources. The Seoul Guarantee Insurance Company, origi-
recognized in the form of policy reserves with a long ma-            businesses. The products and premium rates of non-life                Specialized Non-life Insurance Companies                      nally established in 1969 under the name Korea Fidelity
turity, the investment assets tend to have long maturities           insurance companies have been deregulated since 1998, al-             Reinsurance companies and Seoul Guarantee Insur-              and Surety Company, specializes in providing guarantees
as well. At the end of the 1970s, there were only six life           though KIDI is responsible to review the rates on an annual       ance Company are also regarded as non-life insurance              to entrepreneurs and individuals. Since 1989 when Hankuk
insurance companies in Korea. However, with substantially            basis. The liabilities of non-life insurance companies mainly     companies in Korea.                                               Fidelity and Surety Company were as established, the two
lowered entry barriers amid market openings and deregu-              consist of policy reserves whereas the investment assets              Reinsurance companies, which function as — insurance          guarantee insurance companies have provided a competi-
lation, as of December 2008, there were 22 life insurance            mainly consist of securities such as bonds and stocks,            companies for primary insurers, insure a certain portion of       tive environment for the insurance market. However, after
companies in operation (14 domestic life insurers, 7 foreign         loans, deposits and real estates. Since the liabilities of non-   the risk of life and general non-life insurance companies. In     the 1997-1998 financial crisis, the two guarantee insurance
life insurers, and 1 branch of a foreign life insurer). Following    life insurance companies have shorter maturity periods            a reinsurance contract, the reinsurer charges a premium to        companies merged as Seoul Guarantee Insurance Compa-
the onset of the 1997-1998 financial crisis, 9 life insurers         compared to those of life insurance companies, the invest-        indemnify the primary insurer against all or part of the loss     ny in November 1998. As of December 2008, there were 10
were dissolved with the transfer of policies to other insurers,      ment assets of non-life insurers also tend to be more liquid,     that may be sustained under its policies. Reinsurance is a        specialized non-life insurance companies: 2 were domestic
and five life insurers were merged as part of the financial          such as cash and bank deposits.                                   way for primary insurers to protect against unforeseen or         companies and 8 were branches of foreign insurance com-
restructuring. (b) Non-life Insurance Companies                           As of December 2008, there were 20 general non-life          extraordinary losses. It also serves to limit liability on spe-   panies.

38                                                                                                                                                                                                                                                                   39
Cover Story

                                                                   Financial Positions
     1948-59>>9 life insurers: Choseon (21), Daehan (46),
     Korea (47)>>13 non-life insurers: Dongyang (22), New            Life Insurance Companies
     Dong-a (46), Dongbang (52)                                      For FY2008 ended March 31, 2009 the preliminary net
                                                               income of life insurance companies fell to 617.2 billion won
     1960-69>>6 life insurers: Choseon liquidated, Korea       from 2.11 trillion won to record a drop of 70.7% or KRW1.49
     (Korea+Dong-a) (62), Hyupdong liquidated (64)>>14         trillion on year. With the Kospi Index sagging from 1,703.99
     Non-life insurers: Dongbu, Dongkuk, Haedong, Hy-          at end-March 2008 to 1,206.26 at end-March 2009, insur-
     undai, Dongbang etc.                                      ance companies’ profitability was hit largely by the 1.3 tril-
                                                               lion won decrease in investment gains and other conditions
     1970-79>>6 life insurers: Korea Life Insurance liqui-     affecting asset management.
     dated, Donghae Life Insurance established (73)>>15              Seven out of the 22 life insurance companies reported
     non-life insurers    Due to the limit on the establish-   losses for the period. Among others, the drop in net income
     ment of insurance companies, there was no change in       pulled all profitability indicators down significantly, including
     the non-life insurance industry until the late 1980s.     return on assets (ROA). Life insurance companies’ ROA was
                                                               0.2% while return on equity (ROE) was 2.9%, down by 0.5
     1980-89>>25 life insurers: Foreign life insurers en-      and 7.2 percentage points respectively.
     tered the Korean market. Regional life insurance com-           As a measure of gains and losses on investment, the re-
     panies set up>>14 non-life insurers                       turn on invested assets also fell percentage points on year
                                                               to 4.9%.
     1990-97>>33 life insurers: 2 foreign, 1 nationwide,             Sales of Insurance Policies: Concerns over a prospec-
     5 regional life insurance companies incorporated.         tive economic slump dampened sales of new life insurance
     Domestic life insurers advanced into the overseas         policies and caused income from variable insurance to fall.
     market.    12 overseas offices.>>17 non-life insurers:     Life insurance companies’ premium income for FY2008,
     The policy to liberalize prices of insurance products     including those for special accounts, declined to 74.15 tril-
     promoted liberalization of the insurance market (93)      lion won, down 1.3% or 948.5 billion won from a year ear-
                                                               lier. First insurance premiums fell from 10.7 trillion won in
     1998-99>>29 life insurers: 4 (International, BYC,         FY2007 to 6.8 trillion won in FY2008.
     Taeyang, Korea) liquidated.>>17 non-life insurers:              The market share of large domestic life insurance com-
     Korea+Daehan Guarantee, 1 incorporated (99)               panies in terms of insurance premiums fell from 56.7% last
                                                               year to 54.3% while that of small and medium-sized life in-       companies in FY2008 ended March 31, 2009 was 1.31 tril-                  The market share of the four large domestic non-life in-
     2000-2001>>22 life insurers: 1 incorporated, 8 liqui-     surance companies rose by 2.1 percentage points to 24.0%          lion won, down 21.8% or 366.6 billion won from the same            surance companies fell from 65.8% to 62.7% while those of
     dated.>>22 non-life insurers: 7 incorporated, 2 liqui-    and foreign insurance companies’ by 0.3 percentage points         period a year earlier. Largely due to the 300.0 billion won        small and medium-sized non-life insurance companies’ rose
     dated (withdrawal)                                        to 21.7%.                                                         decrease in income from securities investment, net income          by 1.6 percentage points to 20.7%.
                                                                     Large domestic life insurance companies include Korea       fell last fiscal year despite an increase in sales of long-term           Large domestic non-life insurance companies included
     2002-2003>>23 life insurers: 2 incorporated, 1 liqui-     Life, Samsung, and Kyobo while small and medium-sized             insurance policies. Non-life insurance premiums from long-         Samsung Fire & Marine, Hyundai Marine & Fire, LIG Non-
     dated (03)>>27 non-life insurers: 6 incorporated, 1       life insurance companies include Hungkuk, Kumho, Green            term insurance policies increased from 17.2 trillion won at        Life, and Dongbu while small and medium-sized non-life
     liquidated (02)                                           Cross, Shinhan, Woori Aviva, Mirae Asset, KB, Dongbu,             FY2007 to 20.0 trillion won in FY2008.                             insurance companies included Meritz fire and marine,
                                                               Tongyang, Hana HSBC, and SH&C. Foreign insurance com-                   Nine of the 29 non-life insurance companies reported         Hanwha Non-Life, Lotte Non-Life, Green Non-Life, Hungkuk
     2004-2005>>22 life insurers: 1 incorporated, 2 liqui-     panies include Allianz, New York, MetLife, PCA, Prudential,       losses. As a result of the fall in net income, all of the profit-   SsangYong Fire&Marine, and First Fire & Marine.
     dated (1 withdrawn)>>28 non-life insurers: 2 incorpo-     ING, LINA, and AIG.                                               ability indicators also fell in FY2008. ROA fell by 0.8 percent-         The market share of foreign insurance companies and
     rated, 1 liquidated (withdrawal)                                Financial Soundness: As of end-March 2009, the              age points to 1.9% while ROE declined by 5.0 percentage            those of specialty insurers, such as online car insurers,
                                                               weighted average solvency margin ratio (actual solvency           points to 13.4%. Worsening asset management conditions             guarantee insurers, and reinsurance companies, increased
                                                               margin/statutory solvency margin) of life insurance com-          also brought about the 0.7 percentage point fall in the re-        by 1.5 percentage points over last year to 16.6%.
                                                               panies came to 216.3%, down 20.8 percentage points from           turn on invested assets to 4.8% year-on-year.                            Financial Soundness: As of end-March 2009, the
                                                               the same period last year. Despite various efforts that saw             The loss ratio on car insurance fell to 70.0%, down 2.7      weighted average solvency margin ratio of non-life insur-
                                                               1.4 trillion won in capital expansion, the fall in the solvency   percentage points from the same period last year. Non-life         ance companies was 275.5%, down 13.2 percentage points
                                                               margin ratio is largely ascribed to the 2.0 trillion won valua-   insurance companies’ total retained premiums in FY2008             on year. Despite various efforts that saw the capital of non-
     Before we dwell into greater details on some of the       tion loss in long-term investment securities, among others.       was 36.86 trillion won, up 12.0% or 3.95 trillion won on year      life insurance companies increase by 300.0 billion won, the
above mentioned issues, lest take a look at the latest finan-                                                                     mainly from the perennial demand in private health insur-          solvency margin ratio fell as a result of the 500.0 billion won
cial position of the insurance companies operating in the          Non-life Insurance Companies                                  ance. The share of long-term products in the non-life insur-       valuation loss in long-term investment securities from a de-
country.                                                           Profitability: The net income of non-life insurance           ance market increased to 54.2%.                                    cline in stock prices and the statutory solvency margin go-
                                                                                                                                                                                                    ing up from the increase in long-term insurance sales.

40                                                                                                                                                                                                                                                               41
Cover Story

                                                                     Loan Delinquency Ratios                                          Retirement Pension

                                                                      A preliminary report showed that the loan delinquency             According to an FSS analysis on the operating results
                                                                 ratio of insurance companies as of June 30, 2009 was 3.81%,      of Korea’s retirement pension market, total cumulative re-
                                                                 down 0.28 percentage points from the end of May 2009.            serves were 8.26 trillion won in H1 2009, up 24.9% from 6.61
                                                                 Having maintained an upward swing after September 2008,          trillion won at the end of last year. In H1, the number of
                                                                 the trend of the delinquency ratios started turning around       retirement pension contracts, reserves, and number of pen-
                                                                 for both household and corporate loans with the recent           sion holders all rose by 3.1%, 3.8%, and 3.6%, respectively,
                                                                 drop in new delinquencies and overdue loans regaining            on the monthly average. Cumulatively, there were 64,148
                                                                 good standing, among others.                                     retirement pension contracts, 8.26 trillion won in reserves,
                                                                                                                                  and 1,381,209 pension holders as of end-June 2009.

                                                                      The delinquency ratio for household loans was 3.25% in
                                                                 June, down 0.21 percentage points from 3.46% in the pre-
                                                                 ceding month. The delinquency ratio for mortgage-backed
                                                                 loans continued to stay low at under 1.0% by reporting
                                                                 0.81%, down 0.03 percentage points for the same period.          Retirement Pension Market
                                                                 Policy-backed loans also fell by 0.13 percentage points over                                           Numbers of Contracts         Reserves                     Number of pension holders
                                                                 the preceding month to 4.55%.                                    H1 2009 monthly avg. increase rate    3.1%                         3.8%                         3.6%
                                                                      As of the end of June 2009, the delinquency ratio of        Cumulative figures as of end-Jun. 09   64,148                       KRW8.26 trillion             1,381,209
                                                                 corporate loans was 5.28%, down 0.46 percentage points
                                                                 from 5.74% in May. The delinquency ratio for SME loans in
                                                                 June fell 0.57 percentage points over the preceding month
                                                                 due to the recovery of overdue loans.                                                                                                    Registered Retirement Pension Trustees: There were
                                                                                                                                                                                                     52 retirement pension trustees registered and operating as
                                                                                                                                                                                                     of end-June 2009. Two new trustees entered the market in
Delinquency Ratios of Insurance Companies (End of period)                                                          (In percent)                                                                           Type of Pension Plans & Trustees: By type of pen-
                        09/2008   12/2008    01/2009      02/2009        03/2009      04/2009      05/2009      06/2009                                                                              sion, Defined Benefit (DB) plans led the two other types of
Household loans         3.19      3.27       3.48         3.38           3.25         3.29         3.46         3.25
                                                                                                                                                                                                     pension plans - Defined Contribution (DC) and Individual
                                                                                                                                                                                                     Retirement Accounts (IRA). Banks commanded the high-
Corporate loans         4.68      5.06       5.14         5.27           5.27         5.16         5.74         5.28
                                                                                                                                                                                                     est market share of retirement pension trustees. DB plans
Total                   3.61      3.76       3.94         3.90           3.82         3.84         4.09         3.81
                                                                                                                                                                                                     accounted for 66.0%, followed by DC plans with 25.7%, and
Note: Total insurance company loans outstanding as of end-June 2009: KRW79.1 trillion                                                                                                                IRA with 8.3%. By type of trustee, banks led with 51.0%,
      (Life: KRW65.7 trillion, Non-Life: KRW13.4 trillion)                                                                                                                                           followed by insurers with 36.5%, and securities companies
                                                                                                                                                                                                     with 12.5%.
                                                                                                                                                                                                            Compared with DC plans, the share of DB plans was
Delinquency Ratios of Household Loans (End of period)                                                              (In percent)                                                                      prominently high at insurers with 81.1% and banks with
                        09/2008   12/2008     01/2009     02/2009        03/2009      04/2009      05/2009      06/2009                                                                              58.9%. Securities companies had similar levels for DB and
Policy-backed loans     4.39      4.53        4.80        4.54           4.45         4.47         4.68         4.55
                                                                                                                                                                                                     DC plans with 50.4% and 47.1%, respectively. It was nota-
                                                                                                                                                                                                     ble during the period that banks exceeded 50% of market
Mortgage-backed loans   0.68      0.74        0.82        0.83           0.84         0.82         0.84         0.81
                                                                                                                                                                                                     share for the first time.
Total                   3.19      3.27        3.48        3.38           3.25         3.29         3.46         3.25

                                                                                                                                  Type of Pension & Trustees (as of end of June 2009, in reserves)                                                   (In KRW100 mil)

Delinquency Ratios of Corporate Loans (End of period)                                                              (In percent)                            DB plans                   DC plans                  IRA                      Total
                        09/2008   12/2008     01/2009     02/2009        03/2009      04/2009      05/2009      06/2009           Insurers                 24,448       81.1%         4,276      14.2%          1,428     4.7%           30,153       36.5%
SME loans               2.20      2.34        2.60        2.67           2.80         3.11         3.24         2.67              Banks                    24,849       58.9%         12,128     28.8%          5,180     12.3%          42,157       51.0%
PF loans                2.23      2.44        2.54        2.55           3.00         3.99         4.59         4.06              Securities firms          5,186        50.4%         4,849      47.1%          251       2.5%           10,286       12.5%
Total                   4.68      5.06        5.14        5.27           5.27         5.16         5.74         5.28              Total                    54,483       66.0%         21,254     25.7%          6,860     8.3%           82,597       100.0%

42                                                                                                                                                                                                                                                               43
Cover Story

     Operations of Reserves: As of end-June, reserves
tended to be securely invested with 83.8% being in prod-
ucts guaranteeing principle and interest, such as savings
and term deposits. As much as 91.4% of DB plans’ reserves
were operated in guaranteed products, much higher than
64.8% in DC plans. In the case of insurers and banks, 94.5%
and 84.6% of the reserves were respectively allocated in
guaranteed products, much higher than securities compa-
nies’ 49.7%.
     Future Prospects: Retirement pension market is ex-
pected to continue growing on the sunset of the Retirement
Insurance and Retirement Trust plans in 2010 and competi-
tion among trustees will intensify. Banks are also expected
to continue building on their market share from their exten-
sive branch network and active reorganization.

     Bancassurance                                                 17% from 670.4 billion won in 2007. Life insurers paid 603.5
                                                                   billion won in agency fees and nonlife insurers paid 177.4
      South Korea’s bancassurance market saw a 16% drop            billion won. Banks accounted for 92.6% of agency fees, to-
in new policy premium income to 3.15 trillion won in 2008          taling 723.2 billion won last year, with 552.5 billion won from
due to the impact of global financial crisis, according to the      life insurers and 170.7 billion won from nonlife insurers.
country’s insurance regulator.                                           In 2008, the regulator said 109 financial institutions
      New life insurance policies saw a 16% drop in sales          were under agency agreements with insurance companies,
through the bacassurance channels to 2.92 trillion won, and        including 16 banks, 20 securities firms and 73 mutual sav-
new nonlife policies fell 11% to 228 billion won. Sales of         ings banks.
new insurance policies contributed 35.2% of total bancas-
surance premium income in 2008.
      FSS said it will “further strengthen its monitoring of the       Foreign Presence
market for incomplete and unlawful sales” as business con-
ditions for bancassurance have been adversely affected by                Currently, there is a total of 17 foreign non-life insur-
the global financial downturn.                                      ance companies operating in Korea, with three in the form
      Overall, the bancassurance market posted a 7.2% rise         of subsidiary and 14 in branch. During the last three years,
in premium income to 10.58 trillion won in 2008, up from 9.87      a total of six companies either launched operations or took
trillion won in 2007, according to the financial regulator.         over an existing non-life insurer.
      Life insurance products accounted for 81.6% of total               Foreign companies have developed their own special-           Foreign Insurers in Korea
bancassurance premium income at 8.64 trillion won. Premi-          ties in insurance products and sales channels. Kyobo Axa
                                                                                                                                                                                 Insurance companies                                                                           Count
um income for nonlife policies amounted 1.95 trillion won,         and ERGO Daum focus on online auto insurance while AHA
representing 18.4% of total bancassurance sales.                   and ACE concentrate on providing insurance for personal
                                                                                                                                         Korean subsidiaries                     Kyobo Axa General Insurance, ERGO Daum Direct Auto Insurance, DAS Legal Expenses              3
      A rising number of financial institutions, including banks,   injury, disease, and travel. Federal and Mitsui deal in liability                                             Insurance
securities firms and mutual savings banks, sell insurance          and property insurance while First American Title special-
products in South Korea. In 2008 there was a 7% rise in the        izes in real estate title insurance. Cologne Re, meanwhile,           Korean branches
number of bancassurance agreements to 630. Of that, life           centered on reinsuring life insurance while Swiss Re and
insurance companies saw 8% growth in the number of ban-            Tokio Marine focus on reinsuring non-life insurance policies.         Primary Insurers                        American Home Assurance, ACE American Insurance, Federal Insurance, First American            5
                                                                                                                                                                                 Title Insurance, Mitsui Sumitomo Insurance
cassurance agreements to 340. For nonlife insurers, total                Foreign non-life insurance companies’ direct written
agreements rose 5% to 290.                                         premiums was 1.34 trillion won in FY2008, commanding a
                                                                                                                                         Dedicated reinsurers                    Cologne Reinsurance, Swiss Reinsurance, Munich Reinsurance, Tokio Marine & Nichido            7
      Bancassurance channels contributed 9.6% of Korea’s           3.6% market share of Korea’s 37.50 trillion won non-life in-                                                  Fire Insurance, SCOR Reinsurance Asia Pacific, RGA Reinsurance, Hannover Reinsurance
total 110.14 trillion won in premium income in 2008, up from       surance market. Foreign non-life insurance companies’ mar-
9.3% in 2007. Banks accounted for 98.4% of total bancas-           ket share grew from 1.4% in FY2006, and 3.0% in FY2007.               Dedicated guarantee insurers            Genworth Mortgage Insurance, AIG United Guaranty                                              2
surance sales with a total of 10.4 trillion won in 2008.           Though foreign non-life insurance companies posted 64.9
                                                                                                                                       Note 1: Kyobo Auto became Kyobo Axa in May 2007 while Daum Direct became ERGO Daum Direct in June 2008.
      In South Korea, insurance companies paid 780.9 billion       billion won in operating losses, their net income recorded                  DAS Legal Expenses Insurance received approval in May 2009 and is expected to start operations in October this year.
won in agency fees for bancassurance partners in 2008, up          17.6 billion won from investment gains of 71.4 billion won.         Note 2: As of July 2009, there were a total of 31 non-life insurance companies in Korea, including 14 domestic companies and 17 foreign companies.

44                                                                                                                                                                                                                                                                                          45
Cover Story

     Issues and Outlook                                                                                                                                                                                   EUCCK Roundtable

    Total assets and premium income growth in the life in-        as the ongoing low interest rate policy is forecast to be        itability of non-life insurers. As in the case of life insurers,         On September 4th, the EUCCK Insurance Committee
surance industry in the third quarter of 2009 are expected        extended. To cope better with financial instability and low       non-life insurers are afraid they will suffer from a decrease      organized a roundtable with Insurance Committee’s casual
to slow or event contract due to deteriorating insurance          interest rates, life insurers must find out and develop alter-    in new insurance contracts written and an increase in the          round-table dinner with several academics on “The Outlook
and investment business environments following the recent         native long term investment tools that are less vulnerable to    cancellation and surrendering of insurance contracts result-       of the Insurance Industry”.
financial crisis and the resulting recession. In particular,      the financial market condition.                                   ing from the recession.                                                  The guests included Prof. Kim Jae-hyun, Dept of Fi-
there are concerns that the sales of death insurance such              The non-life insurance industry is expected to con-              In addition, the FSC recently decided to set a maximum        nance , Risk Management and Insurance, Sangmyung
as whole life and illness insurance, which account for more       tinue its growth trend into the third quarter of 2009, mainly    coverage limit for medical insurance, which has been one of        University; Prof. Lee Seong-bong, Dept. of International
than half of total insurance premiums, will fall from the drop    driven by continued growth in long-term non-life insurance,      the key business line for non-life insurers. There are con-
                                                                                                                                                        lines                                         Business Administration, Seoul Women’s University; Prof.
in consumers real disposable income. It does not appear           although the economic downturn is forecast to persist for                               insurers will suffer a decrease in demand
                                                                                                                                   cerns that non-life insu                                           Hur Yeon, Dept. of Business and College of Social Science,
that the life insurance industry will see a return to past        the time being. In particular, long-term non-life insurance is
                                                                                                                     nsurance      and sales of medical insurance due to this new constraint.
                                                                                                                                                             i                                        Chung-Ang University and Prof. Jung Hong-joo Professor
growth levels for the time being, considering the life insurers   likely to carry on its strong growth trend by virtue of stead-   On the investment business side, non-life insurers, like life
                                                                                                                                                           bus                                        of Risk Management and Insurance, SungKyunKwan Univer-
business results tend to lag economic or business indices.        ily increasing demand for super personal insurance and
                                                                             sing                                                  insurers, will experience a declining trend in investment in-      sity.
     According to experts, during the third quarter of 2009,      increased sales through GA channel. There nonetheless ex-                              being.
                                                                                                                                   come for the time being                                                  The EUCCK Insurance Committee members engaged in
investment profits of life insurers are expected to decrease,
                                    re                            ist some negative factors threatening the growth and prof-                                                                          a passionate discussion with the guests on the insurance
                                                                                                                                                                                                      policies of the governments and the problems being faced
                                                                                                                                                                                                      by foreign investors in this sector.
                                                                                                                                                                                                            Many of them pointed out that the office of the finan-
                                                                                                                                                                                                      cial regulator in Korea is much more open, accessible and
                                                                                                                                                                                                      transparent than in many other developed countries.
                                                                                                                                                                                                            “They are quite open to discussions and are willing to
                                                                                                                                                                                                      listen to the concerns of the foreign investors, However,
                                                                                                                                                                                                      there continue to be problems in the policies that are being
                                                                                                                                                                                                      implemented,” one member said.
                                                                                                                                                                                                            The Insurance Industry in Korea is broadly regulated by
                                                                                                                                                                                                      two entities. As part of its regulatory oversight, the Financial
                                                                                                                                                                                                      Services Commission (FSC) deliberates and decides on
                                                                                                                                                                                                      policy matters relating to the inspection and supervision of
                                                                                                                                                                                                      financial institutions and the securities and futures markets.
                                                                                                                                                                                                      The FSC also has the authority to issue and revoke licenses
                                                                                                                                                                                                      from financial institutions.
                                                                                                                                                                                                            The Financial Supervisory Services (FSS) is primarily
                                                                                                                                                                                                      responsible for supervision and examination of the regu-
                                                                                                                                                                                                      lated financial institutions in Korea. It also has the authority
                                                                                                                                                                                                      to order the submission of documents, records, or personal
                                                                                                                                                                                                      testimony necessary for investigation. Noncompliance or
                                                                                                                                                                                                      providing deliberately false statements in an FSS investiga-
                                                                                                                                                                                                      tion constitutes an offense punishable under the law. Upon
                                                                                                                                                                                                      approval from the FSC, the FSS may also recommend dis-
                                                                                                                                                                                                      missal of officers and managers of financial institutions who
                                                                                                                                                                                                      are found to be liable for violation of rules and regulations.
                                                                                                                                                                                                      The FSS also serves as a mediator of disputes between
                                                                                                                                                                                                      financial institutions and investors and depositors and credi-
                                                                                                                                                                                                            Some of the participants said that by and large the Ko-
                                                                                                                                                                                                      rean authorities are nationalistic and therefore tend to favor
                                                                                                                                                                                                      the domestic companies who have a very big influence. This
                                                                                                                                                                                                      is a big disadvantage for foreign insurance companies.
                                                                                                                                                                                                            The meeting then proceeded to discuss about the lat-
                                                                                                                                                                                                      est policy matters in the sector. Special attention was given
                                                                                                                                                                                                      to the policy announcement that insurance companies will

46                                                                                                                                                                                                                                                                  47
Cover Story

be gradually allowed to use their own tools to calculate the
risk levels of their assets.
     With the current financial turmoil calling for more ac-
curate tools to estimate the amount of risky assets at insur-
ers for them to weather such hardship, the FSS expects the
measure to help them meet global risk-management stand-
     Major local insurers and foreign insurance companies
have been asking the regulator to allow their own tools in
evaluating their risky assets, as ‘Risk-based Capital’ frame-
work became a new norm of the industry from April this
     Under the RBC system, all the insurers have to use a
standardized risk coefficient, regardless of unique situation
each company faces. As the level of risk each insurance
firm faces varies, the system has been criticized because
it can lead insurers with a lot of risky assets to have insuf-
ficient capital in reserve, and those with far less risky assets
to have too much capital.
     Insurance companies can either remain with the stand-
ardized method or use customized tools from this year, but
each new risk-calculating model must win approval from the
FSS six months before it is launched.
     Moreover, substantial changes for Korean insurers, in
terms of regulation, such as expanding business territories
and increasing self-regulation in asset management, are
scheduled to be enforced in the near future. It is important
that they are designed so that the financial industry, includ-
ing the insurance industry, will be more competitive in the
long run, while ensuring that stability is maintained, the par-
ticipants noted.
     Among the other matters that came up for discussion
was the review process for new products which is not trans-
parent. Some participants said that it is almost impossible
to get approval from the regulator for new insurance prod-
     A lot of discussion also took place about bancassur-
ance which was first introduced in August, 2003, to help
consumers purchase insurance at a lower cost and im-
prove market efficiency. The full-fledged implementation of
bankassurance, a combination of banking and insurance
services and other policy measures to promote the devel-
opment of the nation’s insurance policy has sparked fierce
resistance from industry insiders so far.
     In light of the potential impact of bancassurance on the
insurance market, a phase-in approach was adopted. How-
ever in recent days, with the conflict between banks and
insures over the expansion of bancassurance intensifying,
the fourth phase was put on hold.
     All in all the participants spent a productive evening lis-
tening to experts in the field.
                                                                   EUCCK Insurance Committee members at the Roundtable meeting

48                                                                                                                               49
Cover Story

Basic Facts

                                        Insurance, in law and economics, is a form of risk manage-
The following is a brief description    ment primarily used to hedge against the risk of a contin-
                                        gent loss. Insurance is defined as the equitable transfer of
about the principles of insurance,      the risk of a loss, from one entity to another, in exchange
                                        for a premium, and can be thought of as a guaranteed and
reproduced from copyright free          known small loss to prevent a large, possibly devastating
sources including online encyclopedia        An insurer is a company selling the insurance; an in-
                                        sured or policyholder is the person or entity buying the
Wikipedia.                              insurance. The insurance rate is a factor used to determine
                                        the amount to be charged for a certain amount of insur-
                                        ance coverage, called the premium. Risk management, the
                                        practice of appraising and controlling risk, has evolved as a
                                        discrete field of study and practice.

50                                                                                                 51
Cover Story

     Principles of Insurance                                      losses. There is little point in paying such costs unless the
                                                                  protection offered has real value to a buyer.
   Commercially insurable risks typically share seven com-
mon characteristics.                                                   Affordable Premium:
                                                                       If the likelihood of an insured event is so high, or the
     A large number of homogeneous exposure units:                cost of the event so large, that the resulting premium is
     The vast majority of insurance policies are provided for     large relative to the amount of protection offered, it is not
individual members of very large classes. The existence of        likely that anyone will buy insurance, even if on offer. Fur-
a large number of homogeneous exposure units allows in-           ther, as the accounting profession formally recognizes in
surers to benefit from the so-called “law of large numbers,”       financial accounting standards, the premium cannot be so
which in effect states that as the number of exposure units       large that there is not a reasonable chance of a significant
increases, the actual results are increasingly likely to be-      loss to the insurer. If there is no such chance of loss, the
come close to expected results. There are exceptions to           transaction may have the form of insurance, but not the
this criterion. Lloyd’s of London is famous for insuring the      substance.
life or health of actors, actresses and sports figures. Satel-
lite Launch insurance covers events that are infrequent.               Calculable Loss:
Large commercial property policies may insure exceptional              There are two elements that must be at least estimable,
properties for which there are no ‘homogeneous’ exposure          if not formally calculable: the probability of loss, and the
units. Despite failing on this criterion, many exposures like     attendant cost. Probability of loss is generally an empiri-
these are generally considered to be insurable.                   cal exercise, while cost has more to do with the ability of a
                                                                  reasonable person in possession of a copy of the insurance
     Definite Loss:                                                policy and a proof of loss associated with a claim presented
     The event that gives rise to the loss that is subject to     under that policy to make a reasonably definite and objec-
the insured, at least in principle, take place at a known time,   tive evaluation of the amount of the loss recoverable as a
in a known place, and from a known cause. The classic ex-         result of the claim.
ample is death of an insured person on a life insurance pol-
icy. Fire, automobile accidents, and worker injuries may all           Limited risk of catastrophically large losses:
easily meet this criterion. Other types of losses may only be          The essential risk is often aggregation. If the same
definite in theory. Occupational disease, for instance, may        event can cause losses to numerous policyholders of the
involve prolonged exposure to injurious conditions where no       same insurer, the ability of that insurer to issue policies be-
specific time, place or cause is identifiable. Ideally, the time,   comes constrained, not by factors surrounding the individu-
place and cause of a loss should be clear enough that a           al characteristics of a given policyholder, but by the factors
reasonable person, with sufficient information, could objec-       surrounding the sum of all policyholders so exposed. Typi-
tively verify all three elements.                                 cally, insurers prefer to limit their exposure to a loss from a
                                                                  single event to some small portion of their capital base, on
    Accidental Loss:                                              the order of 5 percent. Where the loss can be aggregated,
    The event that constitutes the trigger of a claim should      or an individual policy could produce exceptionally large
be fortuitous, or at least outside the control of the benefici-    claims, the capital constraint will restrict an insurer’s ap-
ary of the insurance. The loss should be ‘pure,’ in the sense     petite for additional policyholders. The classic example is
that it results from an event for which there is only the op-     earthquake insurance, where the ability of an underwriter to
portunity for cost. Events that contain speculative elements,     issue a new policy depends on the number and size of the
such as ordinary business risks, are generally not consid-        policies that it has already underwritten. Wind insurance in
ered insurable.                                                   hurricane zones, particularly along coast lines, is another
                                                                  example of this phenomenon. In extreme cases, the aggre-
     Large Loss:                                                  gation can affect the entire industry, since the combined
     The size of the loss must be meaningful from the per-        capital of insurers and reinsurers can be small compared
spective of the insured. Insurance premiums need to cover         to the needs of potential policyholders in areas exposed to
both the expected cost of losses, plus the cost of issuing        aggregation risk. In commercial fire insurance it is possible
and administering the policy, adjusting losses, and supply-       to find single properties whose total exposed value is well
ing the capital needed to reasonably assure that the insurer      in excess of any individual insurer’s capital constraint. Such
will be able to pay claims. For small losses these latter         properties are generally shared among several insurers, or
costs may be several times the size of the expected cost of       are insured by a single insurer who syndicates the risk into
                                                                  the reinsurance market.

52                                                                                                                             53
Cover Story

     Indemnification                                                   Insurers’ Business Model

      The technical definition of “indemnity” means to make            Underwriting and Investing
whole again. There are two types of insurance contracts;          The business model can be reduced to a simple equation:
an “indemnity” policy and a “pay on behalf” or “on behalf         Profit = earned premium + investment income - incurred
of” policy. The difference is significant on paper, but rarely     loss - underwriting expenses.
material in practice.
      An “indemnity” policy will never pay claims until the             Insurers make money in two ways:
insured has paid out of pocket to some third party; for ex-           · Through underwriting, the process by which insurers
ample, a visitor to your home slips on a floor that you left             select the risks to insure and decide how much in pre-
wet and sues you for $10,000 and wins. Under an “indem-                 miums to charge for accepting those risks;
nity” policy the homeowner would have to come up with                 · By investing the premiums they collect from insured
the $10,000 to pay for the visitor’s fall and then would be             parties.
“indemnified” by the insurance carrier for the out of pocket
costs (the $10,000).                                                   The most complicated aspect of the insurance busi-
      Under the same situation, a “pay on behalf” policy, the     ness is the underwriting of policies. Using a wide assort-
insurance carrier would pay the claim and the insured (the        ment of data, insurers predict the likelihood that a claim will
homeowner) would not be out of pocket for anything. Most          be made against their policies and price products accord-
modern liability insurance is written on the basis of “pay on     ingly. To this end, insurers use actuarial science to quantify
behalf” language.                                                 the risks they are willing to assume and the premium they
      An entity seeking to transfer risk (an individual, corpo-   will charge to assume them. Data is analyzed to fairly ac-
ration, or association of any type, etc.) becomes the ‘insured’   curately project the rate of future claims based on a given
party once risk is assumed by an ‘insurer’, the insuring          risk. Actuarial science uses statistics and probability to ana-
party, by means of a contract, called an insurance ‘policy’.      lyze the risks associated with the range of perils covered,
Generally, an insurance contract includes, at a minimum,          and these scientific principles are used to determine an in-
the following elements: the parties (the insurer, the insured,    surer’s overall exposure. Upon termination of a given policy,
the beneficiaries), the premium, the period of coverage,          the amount of premium collected and the investment gains
the particular loss event covered, the amount of coverage         thereon minus the amount paid out in claims is the insurer’s
(i.e., the amount to be paid to the insured or beneficiary in      underwriting profit on that policy.
the event of a loss), and exclusions (events not covered).             Of course, from the insurer’s perspective, some policies
An insured is thus said to be “indemnified” against the loss       are “winners” (i.e., the insurer pays out less in claims and
covered in the policy.                                            expenses than it receives in premiums and investment in-
      When insured parties experience a loss for a specified       come) and some are “losers” (i.e., the insurer pays out more
peril, the coverage entitles the policyholder to make a ‘claim’   in claims and expenses than it receives in premiums and
against the insurer for the covered amount of loss as speci-      investment income); insurance companies essentially use
fied by the policy. The fee paid by the insured to the insurer     actuarial science to attempt to underwrite enough “winning”
for assuming the risk is called the ‘premium’. Insurance          policies to pay out on the “losers” while still maintaining
premiums from many insureds are used to fund accounts             profitability.
reserved for later payment of claims—in theory for a rela-             An insurer’s underwriting performance is measured in
tively few claimants—and for overhead costs. So long as an        its combined ratio. The loss ratio (incurred losses and loss-
insurer maintains adequate funds set aside for anticipated        adjustment expenses divided by net earned premium) is
losses (i.e., reserves), the remaining margin is an insurer’s     added to the expense ratio (underwriting expenses divided
profit.                                                            by net premium written) to determine the company’s com-
                                                                  bined ratio. The combined ratio is a reflection of the com-
                                                                  pany’s overall underwriting profitability. A combined ratio of
                                                                  less than 100 percent indicates underwriting profitability,
                                                                  while anything over 100 indicates an underwriting loss.
                                                                       Insurance companies also earn investment profits on          The most complicated aspect
                                                                  “float”. “Float” or available reserve is the amount of money,
                                                                  at hand at any given moment, that an insurer has collected        of the insurance business is the
                                                                  in insurance premiums but has not been paid out in claims.
                                                                  Insurers start investing insurance premiums as soon as            underwriting of policies.

54                                                                                                                                                                     55
Cover Story

they are collected and continue to earn interest on them         not believe that it is forever possible to sustain a profit from
until claims are paid out. The Association of British Insurers   float without an underwriting profit as well, but this opinion
(gathering 400 insurance companies and 94% of UK insur-          is not universally held. Naturally, the “float” method is diffi-
ance services) has almost 20% of the investments in the          cult to carry out in an economically depressed period. Bear
London Stock Exchange.                                           markets do cause insurers to shift away from investments
     In the United States, the underwriting loss of property     and to toughen up their underwriting standards. So a poor
and casualty insurance companies was $142.3 billion in           economy generally means high insurance premiums. This
the five years ending 2003. But overall profit for the same        tendency to swing between profitable and unprofitable pe-
period was $68.4 billion, as the result of float. Some insur-     riods over time is commonly known as the “underwriting” or
ance industry insiders, most notably Hank Greenberg, do          insurance cycle.

                                                                                                                                        Property and casualty insurers currently make the most          In managing the claims handling function, insurers seek
                                                                                                                                   money from their auto insurance line of business. Generally     to balance the elements of customer satisfaction, adminis-
                                                                                                                                   better statistics are available on auto losses and under-       trative handling expenses, and claims overpayment leakag-
                                                                                                                                   writing on this line of business has benefited greatly from      es. As part of this balancing act, fraudulent insurance prac-
                                                                                                                                   advances in computing. Additionally, property losses in the     tices are a major business risk that must be managed and
                                                                                                                                   United States, due to unpredictable natural catastrophes,       overcome. Disputes between insurers and insureds over the
                                                                                                                                   have exacerbated this trend.                                    validity of claims or claims handling practices occasionally
                                                                                                                                                                                                   escalate into litigation; see insurance bad faith.
                                                                                                                                       Claims and loss handling is the materialized utility of          Any risk that can be quantified can potentially be in-
                                                                                                                                   insurance; it is the actual “product” paid for, though one      sured. Specific kinds of risk that may give rise to claims are
                                                                                                                                   hopes it will never need to be used. Claims may be filed        known as “perils”. An insurance policy will set out in detail
                                                                                                                                   by insureds directly with the insurer or through brokers or     which perils are covered by the policy and which are not. A
                                                                                                                                   agents. The insurer may require that the claim be filed on its   single policy may cover risks in one or more of the catego-
                                                                                                                                   own proprietary forms, or may accept claims on a standard       ries set out below. For example, auto insurance would typi-
                                                                                                                                   industry form such as those produced by ACORD.                  cally cover both property risk (covering the risk of theft or
                                                                                                                                       Insurance company claim departments employ a large          damage to the car) and liability risk (covering legal claims
                                                                                                                                   number of claims adjusters supported by a staff of records      from causing an accident). A homeowner’s insurance policy
                                                                                                                                   management and data entry clerks. Incoming claims are           in the U.S. typically includes property insurance covering
                                                                                                                                   classified based on severity and are assigned to adjusters       damage to the home and the owner’s belongings, liability
                                                                                                                                   whose settlement authority varies with their knowledge and      insurance covering certain legal claims against the owner,
                                                                                                                                   experience. The adjuster undertakes a thorough investiga-       and even a small amount of coverage for medical expenses
                                                                                                                                   tion of each claim, usually in close cooperation with the       of guests who are injured on the owner’s property.
                                                                                                                                   insured, determines its reasonable monetary value, and               Business insurance can be any kind of insurance that
                                                                                                                                   authorizes payment. Adjusting liability insurance claims is     protects businesses against risks. Some principal subtypes
                                                                                                                                   particularly difficult because there is a third party involved   of business insurance are (a) the various kinds of profes-
                                                                                                                                   (the plaintiff who is suing the insured) who is under no con-   sional liability insurance, also called professional indemnity
                                                                                                                                   tractual obligation to cooperate with the insurer and in fact   insurance, which are discussed below under that name; and
                                                                                                                                   may regard the insurer as a deep pocket. The adjuster must      (b) the business owner’s policy (BOP), which bundles into
                                                                                                                                   obtain legal counsel for the insured (either inside “house”     one policy many of the kinds of coverage that a business
                                                                                                                                   counsel or outside “panel” counsel), monitor litigation that    owner needs, in a way analogous to how homeowners insur-
                                                                                                                                   may take years to complete, and appear in person or over        ance bundles the coverage that a homeowner needs.
                                                                                                                                   the telephone with settlement authority at a mandatory set-
                                                                                                                                   tlement conference when requested by the judge.

56                                                                                                                                                                                                                                                             57
Cover Story

History of Insurance
In some sense we can say that insurance          was registered in special offices.                will was signed and sealed on 17 November
appears simultaneously with the appear-                The purpose of registering was that        1628 but not proved until 1633.
ance of human society. We know of two            whenever the person who presented the                  Toward the end of the seventeenth
types of economies in human societies:           gift registered by the court was in trouble,     century, London’s growing importance as
money economies (with markets, money,            the monarch and the court would help him.        a centre for trade increased demand for
financial instruments and so on) and non-        Jahez, a historian and writer, writes in one     marine insurance. In the late 1680s, Edward
money or natural economies (without              of his books on ancient Iran: “[W]henever        Lloyd opened a coffee house that became
money, markets, financial instruments and        the owner of the present is in trouble or        a popular haunt of ship owners, merchants,
so on). The second type is a more ancient        wants to construct a building, set up a feast,   and ships’ captains, and thereby a reliable
form than the first. In such an economy and       have his children married, etc. the one in       source of the latest shipping news. It be-
community, we can see insurance in the           charge of this in the court would check          came the meeting place for parties wish-
form of people helping each other. For ex-       the registration. If the registered amount       ing to insure cargoes and ships, and those
ample, if a house burns down, the members        exceeded 10,000 Derrik, he or she would          willing to underwrite such ventures. Today,
of the community help build a new one.           receive an amount of twice as much.”             Lloyd’s of London remains the leading mar-
Should the same thing happen to one’s                  A thousand years later, the inhabit-       ket (note that it is not an insurance com-
neighbor, the other neighbors must help.         ants of Rhodes invented the concept of the       pany) for marine and other specialist types
Otherwise, neighbors will not receive help       ‘general average’. Merchants whose goods         of insurance, but it works rather differently
in the future. This type of insurance has        were being shipped together would pay a          than the more familiar kinds of insurance.
survived to the present day in some coun-        proportionally divided premium which would             Insurance as we know it today can be
tries where modern money economy with            be used to reimburse any merchant whose          traced to the Great Fire of London, which
its financial instruments is not widespread.      goods were jettisoned during storm or sink-      in 1666 devoured 13,200 houses. In the
     Turning to insurance in the modern          age.                                             aftermath of this disaster, Nicholas Bar-
sense (i.e., insurance in a modern money               The Greeks and Romans introduced           bon opened an office to insure buildings.
economy, in which insurance is part of the       the origins of health and life insurance c.      In 1680, he established England’s first fire
financial sphere), early methods of transfer-     600 AD when they organized guilds called         insurance company, “The Fire Office,” to
ring or distributing risk were practised by      “benevolent societies” which cared for the       insure brick and frame homes.
Chinese and Babylonian traders as long           families and paid funeral expenses of mem-             The first insurance company in the
ago as the 3rd and 2nd millennia BC, re-         bers upon death. Guilds in the Middle Ages       United States underwrote fire insurance
spectively. Chinese merchants travelling         served a similar purpose. The Talmud deals       and was formed in Charles Town (modern-
treacherous river rapids would redistribute      with several aspects of insuring goods. Be-      day Charleston), South Carolina, in 1732.
their wares across many vessels to limit         fore insurance was established in the late       Benjamin Franklin helped to popularize and
the loss due to any single vessel’s capsiz-      17th century, “friendly societies” existed in    make standard the practice of insurance,
ing. The Babylonians developed a system          England, in which people donated amounts         particularly against fire in the form of per-
which was recorded in the famous Code of         of money to a general sum that could be          petual insurance. In 1752, he founded the
Hammurabi, c. 1750 BC, and practised by          used for emergencies.                            Philadelphia Contributionship for the Insur-
early Mediterranean sailing merchants. If a            Separate insurance contracts (i.e., in-    ance of Houses from Loss by Fire. Franklin’s
merchant received a loan to fund his ship-       surance policies not bundled with loans or       company was the first to make contribu-
ment, he would pay the lender an additional      other kinds of contracts) were invented in       tions toward fire prevention. Not only did
sum in exchange for the lender’s guarantee       Genoa in the 14th century, as were insur-        his company warn against certain fire
to cancel the loan should the shipment be        ance pools backed by pledges of landed           hazards, it refused to insure certain build-
stolen or lost at sea.                           estates. These new insurance contracts           ings where the risk of fire was too great,
     Achaemenian monarchs of Ancient             allowed insurance to be separated from           such as all wooden houses. In the United
Persia were the first to insure their people      investment, a separation of roles that first     States, regulation of the insurance industry
and made it official by registering the insur-    proved useful in marine insurance. Insur-        is highly Balkanized, with primary responsi-
ing process in governmental notary offices.       ance became far more sophisticated in            bility assumed by individual state insurance
The insurance tradition was performed            post-Renaissance Europe, and specialized         departments. Whereas insurance markets
each year in Norouz (beginning of the Irani-     varieties developed.                             have become centralized nationally and
an New Year); the heads of different ethnic            Some forms of insurance had devel-         internationally, state insurance commission-
groups as well as others willing to take part,   oped in London by the early decades of the       ers operate individually, though at times in
presented gifts to the monarch. The most         seventeenth century. For example, the will       concert through a national insurance com-
important gift was presented during a spe-       of the English colonist Robert Hayman men-       missioners’ organization. In recent years,
cial ceremony. When a gift was worth more        tions two “policies of insurance” taken out      some have called for a dual state and fed-
than 10,000 Derrik (Achaemenian gold             with the diocesan Chancellor of London,          eral regulatory system (commonly referred
coin) the issue was registered in a special      Arthur Duck. Of the value of £100 each,          to as the Optional federal charter (OFC))
office. This was advantageous to those who        one relates to the safe arrival of Hayman’s      for insurance similar to that which oversees
presented such special gifts. For others, the    ship in Guyana and the other is in regard to     state banks and national banks.
presents were fairly assessed by the con-        “one hundred pounds assured by the said
fidants of the court. Then the assessment        Doctor Arthur Ducke on my life”. Hayman’s                                       Source: Wikipedia

Cover Story


The European Commission has adopted          By purchasing insurance, private customers or companies
                                             transfer risk that may arise from their personal or business
                                                                                                                    The fact that the service provided by the insurer de-
                                                                                                               pends on an uncertain factor, i.e. the occurrence of the
                                             activities to another party, the insurance company. The in-       insured risk, is the crucial characteristic of the insurance
a report on the functioning of the           surance company is better able to manage and absorb the           industry. Cooperation amongst insurers in order to spread
                                             risk due to the fact that it is aggregating risks from a large    risks and to acquire a better knowledge of them is there-
Insurance Block Exemption Regulation         number of customers, which leads to a much less risky             fore a common feature of the industry.
                                             stream of losses. Moreover, the insurance company has a                As early as 1972, the European Commission stated
(BER). The BER, which will expire on 31      better knowledge of the risk in question (the probability of a
                                             specific event occurring as well as the severity of the losses
                                                                                                               in its Second Report on Competition Policy that the EC
                                                                                                               Treaty competition rules applied to the insurance industry.
March 2010, exempts certain agreements       that can be incurred). Insurance companies also offer to
                                             their clients additional services, such as loss prevention and
                                                                                                               The Court confirmed that the industry should be subject to
                                                                                                               these rules in the Verband der Sacheversicherer judgement.

between insurance companies from EC          safety advice, loss settlement advice and other legal servic-
                                             es. The risk transfer mechanism and the related services are
                                                                                                               In this judgement, the Court rejected the argument that
                                                                                                               unlimited competition would increase the risk of insolvency
                                             greatly beneficial to private customers and business. In par-      to the detriment of consumers and that, as cooperation
Treaty antitrust rules’ ban on restrictive   ticular, as far as business is concerned, the transfer of risks   between insurers was required to avoid such a risk, special
                                             associated with commercial and investment activities allows       rules should be adopted under Article 83 EC.
business practices.                          the economy as a whole to be more enterprising.

60                                                                                                                                                                       61
Cover Story

                                                                                                                                  On 24th March 2009, the Commission adopted the Re-                Furthermore the Commission considers at this stage of
                                                                                                                             port to the European Parliament and Council.                      the Review that even if the risk of non-cooperation in these
                                                                                                                                  The Sector Inquiry Report contained an extensive ac-         two areas may be low, the possibility that such pro-compet-
                                                                                                                             count of how insurance markets are organized in the EU,           itive cooperation may diminish, should be avoided.
                                                                                                                             including a significant amount of original research by the             Cooperation on SPCs does not appear to be specific
                                                                                                                             Commission services during the inquiry, which will not be         to the insurance sector and as such does not necessarily
                                                                                                                             repeated here. However, it is useful to recall briefly some       require a sector specific BER. Nor does there appear to be
                                                                                                                             salient features.                                                 a significant risk of less or non-cooperation on SPCs in the
                                                                                                                                  Primary insurance markets for most risks tend to be          event of non-renewal of the BER. The Commission therefore
                                                                                                                             national in scope, even when they are primarily served by         proposes not to renew the BER for SPCs. Further guid-
                                                                                                                             consolidated multinational insurance groups. This is for a        ance on SPCs may be envisaged by the Commission if non-
                                                                                                                             variety of reasons, of which the most important is probably       renewal is the final decision.
                                                                                                                             the fact that insurance contracts are written under, and               Agreements in relation to security devices appear to
                                                                                                                             subject to, general national contract law as well as specific      give rise to concerns in relation to both competition and the
                                                                                                                             insurance law, and that liability issues similarly arise under    development of the EU’s internal market. Moreover, they do
                                                                                                                             national law which may substantially vary from one jurisdic-      not appear specific to the insurance sector.
                                                                                                                             tion to another. In addition, there is a need for a local pres-        The Commission therefore proposes non-renewal of the
                                                                                                                             ence, often for distribution and always for claims settlement,    BER for this category of agreements. However, insurers will
                                                                                                                             and language issues may arise. It is natural thus to charac-      benefit from guidance in terms of applicability or otherwise
                                                                                                                             terize the organization of the market as multi-domestic and       of Article 81 of the Treaty to their agreements on security
                                                                                                                             to exclude, in many cases, the possibility of any competitive     devices, afforded by the general standardization chapter in
                                                                                                                             constraint from cross-border providers short of actual entry.     the Horizontal Guidelines which are currently under review.
                                                                                                                                  The mode of entry for insurers seeking to enter new
                                                                                                                             markets has, to date, usually been through acquisition of a
                                                                                                                             local company which becomes a subsidiary of the acquirer.
                                                                                                                             Greenfield entry is uncommon. National markets tend as
                                                                                                                             a consequence to be quite concentrated, especially in the
                                                                                                                             major categories of risk.
                                                                                                                                  The insurance industry has tended not to be examined
                                                                                                                             outside the industry with the same degree of interest as
                                                                                                                             other areas of financial services. This is likely gradually to
                                                                                                                             change, with the Commission’s work on Solvency , the In-
                                                                                                                             surance Mediation Directive and the BER particularly in the
                                                                                                                             forefront of the debate.
     Insurance Block Exemption Regulation                                                                                         The Commission has come to the preliminary conclu-
                                                                                                                             sion that there are good reasons to protect or facilitate the
     After granting two individual exemptions in 1990, the    Six years after its entry into force, the Commission is re-    agreements on cooperation in the area of joint calculations,
Commission adopted a Block Exemption Regulation in 1992       quired under the Implementing Regulation to submit a           tables and studies, that the current BER is doing this ef-
and, when this Regulation expired at the end of March 2003,   report to the European Parliament and Council on the func-     fectively and should therefore be renewed. The Commission
the Commission replaced it with a Regulation adopted          tioning of the Block Exemption Regulation together with        has not yet decided whether to amend the structure or
after in-depth consultation with the insurance sector, con-   any proposals for amendment in the light of experience.        drafting of the current exemption. However, in terms of im-
sumer organizations and public sector bodies. The Regula-          The Commission therefore began its review of the func-    proving it, a range of options would be considered.
tion grants an exemption to the application of competition    tioning of the Insurance Block Exemption Regulation in April        The Commission’s view at this stage is that pools are
rules to certain types of agreements in the insurance sec-    2008, when it launched a Consultation. In addition to the      also specific to the insurance sector and that there are sev-
tor, namely agreements on:                                    Consultation, the Commission sent targeted questionnaires      eral arguments in favor of the necessity of a BER in order
                                                              to certain stakeholders, public authorities and consumer       to protect or facilitate such agreements. The Commission
     · Joint calculations, tables and studies                 organizations. The Consultation closed in July 2008 having     therefore proposes to renew the BER in relation to pools.
     · Standard policy conditions and models on profits        received 60 replies. Following closure of the Consultation,    However, the Commission would be likely to significantly
     · Common coverage of certain types of risks (pools)      the Commission sent follow-up questionnaires to certain        redraft the wording of the chapter in question in order to
     · Security devices / safety equipment                    stakeholders including small and medium-sized insurers,        take on board many of the comments received during the
                                                              pools and producer federations of security devices. The        Review and also to make it consistent with other general
This Regulation is valid for seven years and will expire in   EU National Competition Authorities, have been closely in-     and sector-specific legislation.
2010.                                                         volved in the Review.

62                                                                                                                                                                                                                                                        63
In Focus   Ease of Doing Business

Ease of Doing
Business                                                        In the World Bank’s annual report measuring the ease of
                                    Doing Business 2010:        doing business Korea ranked 19 th out of 183 countries
                                                                climbing four steps higher than last year’s 23rd . This year’s
                                    Reforming Through           ranking is also the nation’s highest ever.
                                                                     The report evaluates ten business-related indices of
                                    Difficult Times is           which, the nation especially made strides in launching
                                                                and operating businesses and cross border trading. Korea
                                    the seventh in a series     marked 53rd in starting a business, a major jump from 126th
                                                                a year ago. And in trading across borders Seoul came in 8th

                                    of annual reports by        place four notches higher than 2008. The average ranking
                                                                for members of the Organization for Economic Cooperation
                                                                and Development stood at 30th place.
                                    the World Bank,                  Singapore was the top-ranked economy in terms of the
                                                                ease of doing business with New Zealand and Hong Kong
                                    investigating regulations   right behind.
                                                                     The government says the rise in rankings is encourag-
                                    that enhance business       ing as the Lee Myung-bak administration has been pushing
                                                                to create a pro-business environment since taking office
                                    activity and those          last year.
                                                                     This section therefore takes a look at the methodology

                                    that constrain it.          and findings of the report, not just with respect to Korea,
                                                                but for all the countries in the world, which were evaluated.
                                                                     Doing Business presents quantitative indicators on busi-
                                    According to it, Korea      ness regulations and the protection of property rights that
                                                                can be compared across 183 economies, from Afghanistan
                                    is making headway           to Zimbabwe, over time.
                                                                     A set of regulations affecting 10 stages of a business’s
                                    as a business-friendly      life are measured: starting a business, dealing with con-
                                                                struction permits, employing workers, registering property,
                                    environment.                getting credit, protecting investors, paying taxes, trading
                                                                across borders, enforcing contracts and closing a business.
                                                                Data in Doing Business 2010: Reforming Through Difficult
                                                                Times are current as of June 1st, 2009. The indicators are
                                                                used to analyze economic outcomes and identify what re-
                                                                forms have worked, where, and why.

64                                                                                                                          65
In Focus          Ease of Doing Business

                                                                                                                             Starting a Business in the Republic of Korea

                                                                                                                             Starting a Business data                Doing Business 2008         Doing Business 2009      Doing Business 2010

                                                                                                                             Rank                                    ·                           133                      53

                                                                                                                             Procedures (number)                     10                          10                       8

                                                                                                                             Time (days)                             17                          17                       14

                                                                                                                             Cost (% of income per capita)           17.1                        16.9                     14.7

                                                                                                                             Min. capital (% of income per capita)   296.0                       268.9                    0.0

                                                                                                                             Procedures (number)                                           Time (days)

                                                                                                                             12                                                            18





     The Doing Business methodology has limitations. Other         Korea, Rep.’s ranking in Doing Business 2010                            2007               2008           2009                        2007          2008                2009

areas important to business such as an economy’s proxim-
                                                                   Rank                                Doing Business 2010
ity to large markets, the quality of its infrastructure services
(other than those related to trading across borders), the          Ease of Doing Business              19
security of property from theft and looting, the transparency
                                                                   Starting a Business                 53
of government procurement, macroeconomic conditions                                                                          Cost (% of income per capita)                                 Min. capita (% of income per capita)
or the underlying strength of institutions, are not studied        Dealing with Construction Permits   23
directly by Doing Business. To make the data comparable                                                                      20                                                            400

across economies, the indicators refer to a specific type          Employing Workers                   150
of business, generally a local limited liability company op-       Registering Property                71                    15                                                            300
erating in the largest business city. Because standard as-
sumptions are used in the data collection, comparisons and         Getting Credit                      15
benchmarks are valid across economies. The data not only           Protecting Investors                73
                                                                                                                             10                                                            200
highlight the extent of obstacles to doing business; they
also help identify the source of those obstacles, supporting       Paying Taxes                        49
                                                                                                                             5                                                             100
policymakers in designing reform.
                                                                   Trading Across Borders              8
     The data set covers 183 economies: 46 in Sub-Saharan
Africa, 32 in Latin America and The Caribbean, 27 in East-         Enforcing Contracts                 5                     0                                                             0
ern Europe and Central Asia, 24 in East Asia and Pacific, 19                                                                                2007               2008           2009                        2007          2008                2009
                                                                   Closing a Business                  12
in the Middle East and North Africa and 8 in South Asia, as
well as 27 OECD high-income economies as benchmarks.
     The following tables about Korea’s ranking are self-
explanatory.                                                                                                                                                                                                                  Korea Rep.          OECD

66                                                                                                                                                                                                                                                  67
In Focus            Ease of Doing Business

Dealing with Construction Permits in the Republic of Korea                                                     Trading Across Borders in the Republic of Korea
Dealing with Construction Permits data       Doing Business 2008   Doing Business 2009   Doing Business 2010   Trading Across Borders data               Doing Business 2008         Doing Business 2009          Doing Business 2010
Rank                                         ·                     23                    23                    Rank                                      ·                           12                           8
Procedures (number)                          13                    13                    13                    Cost to export (US$ per container)        745                         767                          742
Time (days)                                  34                    34                    34                    Cost to import (US$ per container)        745                         747                          742
Cost (% of income per capita)                170.2                 154.6                 135.6                 Documents to export (number)              4                           4                            3
                                                                                                               Documents to import (number)              6                           6                            3
                                                                                                               Time to export (days)                     11                          8                            8
Employing Workers in the Republic of Korea                                                                     Time to import (days)                     10                          8                            8
Employing Workers data                       Doing Business 2008   Doing Business 2009   Doing Business 2010
Rank                                         ·                     149                   150
Procedures (number)                          ·                     91                    91                    Enforcing Contracts in the Republic of Korea
Time (days)                                  ·                     38                    38                    Enforcing Contracts data                  Doing Business 2008         Doing Business 2009          Doing Business 2010
                                                                                                               Rank                                      ·                           7                            5
                                                                                                               Procedures (number)                       35                          35                           35
Registering Property in the Republic of Korea                                                                  Time (days)                               230                         230                          230
Registering Property data                    Doing Business 2008   Doing Business 2009   Doing Business 2010   Cost (% of claim)                         10.3                        10.3                         10.3
Rank                                         ·                     65                    71
Procedures (number)                          7                     7                     7
                                                                                                               Closing Business in the Republic of Korea
Time (days)                                  11                    11                    11
                                                                                                               Closing Business data                     Doing Business 2008         Doing Business 2009          Doing Business 2010
Cost (% of property value)                   5.1                   5.1                   5.1
                                                                                                               Rank                                      ·                           12                           12
                                                                                                               Time (years)                              1.5                         1.5                          1.5

Getting Credit in the Republic of Korea                                                                        Cost (% of claim)                         4                           4                            4
                                                                                                               Recoverty Rate (cents on the dollar)      81.2                        80.5                         80.5
Getting Credit data                          Doing Business 2008   Doing Business 2009   Doing Business 2010
Rank                                         ·                     12                    15
Strength of legal rights index (0-10)        7                     7                     7
Depth of credit information index (0-6)      5                     6                     6                         Doing Business
Private bureau coverage (% of adults)        0.0                   90.4                  93.8
                                                                                                                     As the report notes, the past year was a tough one for           “Doing Business recorded 287 such reforms in 131
Public registry coverage (% of adults)       74.2                  0.0                   0.0
                                                                                                               doing business. Firms around the world had to cope with           economies between June 2008 and May 2009, 20% more
                                                                                                               the effects of a financial crisis that started in rich econo-      than in the year before. Reformers focused on making it
                                                                                                               mies but led to a global economic downturn. Access to             easier to start and operate a business, strengthening prop-
Protecting Investors in the Republic of Korea                                                                  finance became more difficult. Demand for many products             erty rights and improving the efficiency of commercial dis-
Protecting Investors data                    Doing Business 2008   Doing Business 2009   Doing Business 2010   fell in domestic and international markets, and trade slowed      pute resolution and bankruptcy procedures.
Rank                                         ·                     70                    73                    globally. Policy makers and governments also faced big                 Reforming business regulation on its own is not a rec-
                                                                                                               challenges—from stabilizing the financial sector and restor-       ipe for recovery from financial or economic distress. Many
Strength of investor protection index (0-10) 5.3                   5.3                   5.3
                                                                                                               ing confidence and trust to countering rising unemploy-           other factors come into play. The Doing Business indicators
                                                                                                               ment and providing necessary safety nets as an estimated          do not assess market regulation or the strength of the fi-
                                                                                                               50 million people risked losing their jobs as a result of the     nancial infrastructure, both important factors in understand-
Paying Taxes in the Republic of Korea                                                                          crisis. And all this in the face of rising public debt as fiscal   ing some of the underlying causes of the global financial
Paying Taxes data                            Doing Business 2008   Doing Business 2009   Doing Business 2010   stimulus packages collided with tightening fiscal revenues.        crisis. Nor do they account for other factors important for
                                                                                                                     Despite the many challenges, in 2008/09 more govern-        business at any time, such as macroeconomic conditions,
Rank                                         ·                     45                    49
                                                                                                               ments implemented regulatory reforms aimed at making              infrastructure, workforce skills or security.
Total tax rate (% profit)                     31.2                  33.5                  31.9
                                                                                                               it easier to do business than in any year since 2004, when             But the regulatory environment for businesses can in-
Payments (number per year)                   14                    14                    14                    Doing Business started to track reforms through its indica-       fluence how well firms cope with the crisis and are able to
Time (hours per year)                        290                   250                   250                   tors.                                                             seize opportunities when recovery begins. Where business

68                                                                                                                                                                                                                                          69
In Focus          Ease of Doing Business

regulation is transparent and efficient, it is easier for firms to   ened minority shareholder protections. Entrepreneurs can                                on the ease of doing business does not tell the whole story
reorient themselves and for new firms to start up. Efficient         now start a business in 2 procedures and 3 days. Related                                about its business environment.
court and bankruptcy procedures help ensure that assets            party transactions are subject to stricter approval and dis-                                 And opportunities for reform remain— Liberia, for exam-
can be reallocated quickly. And strong property rights and         closure requirements. Legal provisions determining direc-                               ple, still ranks 149, and Tajikistan 152. Yet an improvement
investor protections can help establish the basis for trust        tors’ liability in case of prejudicial transactions between                             in this ranking does indicate that the government is taking
when investors start investing again.                              interested parties were also tightened.                                                 action to make the local regulatory environment more con-
     Recognizing the importance of firms—especially small               Rwanda improved regulations to ease access to credit                               ducive to doing business.
and mediumsize enterprises—for creating jobs and revenue,          through 2 new laws. Its new secured transactions act facili-                                 Such reforms are as timely as ever. Many firms in devel-
some governments, including those of China, the Republic           tates secured lending by allowing a wider range of assets to                            oping economies have been affected by lower demand for
of Korea, Malaysia and the Russian Federation, have includ-        be used as collateral.                                                                  their exports and a drop in capital flows and remittances. At
ed reforms of business regulation in their economic recov-              The law also makes out-of-court enforcement of mov-                                the same time businesses in low-income economies on av-
ery plans.                                                         able collateral available to secured creditors and gives them   Reforms also included   erage still face more than twice the regulatory burden that
     But most reforms recorded in 2008/09 were part of             absolute priority within bankruptcy. Rwanda’s new insolven-                             their counterparts in high-income economies do when start-
longer-term efforts to increase competitiveness and en-            cy law streamlined reorganization procedures.                   measures to speed       ing a business, transferring property, filing taxes or resolving
courage firm and job creation by improving the regulatory                Reforms also included measures to speed up trade and                               a commercial dispute through the courts. Only 2% of adults
environment for businesses.
     And most took place in developing economies.
                                                                   property registration. Delays at the borders were reduced
                                                                   thanks to longer operating hours and simpler requirements
                                                                                                                                   up trade and property   on average have a credit history in low-income economies,
                                                                                                                                                           compared with 52% of adults in high-income economies.
     Low- and lower-middle-income economies accounted
for two-thirds of reforms recorded by Doing Business in
                                                                   for documents.
                                                                        Reforms removed bottlenecks at the property regis-
                                                                                                                                   registration.                Developed economies have on average 10 times as
                                                                                                                                                           many newly registered firms per adult as Africa and the
2008/09, continuing a trend that started 3 years ago. In-          try and the revenue authority, reducing the time required                               Middle East—and a business density 4 times that in devel-
deed, three-quarters of such economies covered by Doing            to register property by 255 days. Five other low- or lower-                             oping economies.
Business reformed. And for the first time a Sub-Saharan            middle-income economies—the Arab Republic of Egypt,                                          Regulatory burdens can push firms—and employment—
African economy, Rwanda, led the world in Doing Business           Liberia, Moldova, the Kyrgyz Republic and Tajikistan—joined                             into the informal sector. There, firms are not registered, do
reforms.                                                           Rwanda on the list of global top reformers. These top 10 re-                            not pay taxes and have limited access to formal credit and
     Rwanda has steadily reformed its commercial laws and          formers are economies that, thanks to reforms in 3 or more                              institutions— and workers do not benefit from the protec-
institutions since 2001. In the past year it introduced a new      of the 10 areas covered by Doing Business, improved the                                 tions that the law provides. The global crisis is expected to
company law that simplified business start-up and strength-         most on the ease of doing business. An economy’s ranking                                further increase informal activity. Almost two-thirds of the

70                                                                                                                                                                                                                      71
In Focus          Ease of Doing Business

world’s workers are already estimated to be employed in the      in the growth rate and 0.27 percentage points in the invest-
informal sector.                                                 ment rate.
     Most are in low- and lower-middle-income economies.
And a disproportionate share are from already vulnerable
groups, such as youth and women. Most Doing Business                 Inspired by Neighbors,
reforms in developing economies still focus on cutting red           Reformers Pick Up the Pace
tape and simplifying bureaucratic formalities. Over the past
6 years 80% of reforms in low- and lower-middle-income                In 2008/09 Doing Business reforms picked up around
economies were aimed at reducing the administrative bur-         the world, with at least 60% of economies reforming in eve-
den for firms, mostly by easing business start-up and trade.      ry region. Reformers were particularly active in 2 regions,
This makes sense and addresses important needs. When in-         Eastern Europe and Central Asia and the Middle East and
formal firms were asked in 2008 about obstacles to formally       North Africa. In both, competition among neighbors played
registering their business, 67% in Côte d’Ivoire and 57% in      a part in motivating reforms.
Madagascar cited registration fees as a major or very se-             Economies in Eastern Europe and Central Asia, the
vere obstacle.                                                   region most affected by the crisis, were the most active re-
     In easing business start-up and trade, much can be          formers for the sixth year in a row. Twenty-six of the region’s
achieved through cost-effective administrative reforms. The      27 economies reformed business regulation in at least one
one-stop shop for starting a business in Burkina Faso cost       area covered by Doing Business. In 2004/05 and 2005/06
$200,000. Azerbaijan’s cost $5 million. And the costs are        the 10 European Union accession economies accounted for
far outweighed by the estimated savings for businesses—          84 reforms, 60% of the total in the region. Others followed,
estimated at $1.7 million a year in Burkina Faso, $8.4 million   with some good results. Since 2004 private credit bureaus
in Azerbaijan. Efficient systems also facilitate enforcement,     have Today 94% of adults in Serbia, 77% in Croatia and 30%
a particular challenge in many developing economies where        in Kazakhstan and Romania have a credit history. Five years
resources are scarce. Risk-based inspection systems at           ago, none did. Enterprise surveys show that in 2008 fewer
customs or in the construction sector allow public officials      than 6% of firms expected to make informal payments to
to focus their resources and attention where they are most       get things done in Estonia, Slovenia and the Slovak Repub-
needed.                                                          lic—a far cry from the 18%, 14% and 33% in 2005. In the
     Some reforming governments have gone further, intro-        past 3 years reforms have been moving eastward from the
ducing new legislation to strengthen property rights and         European Union. Albania, Belarus, the Kyrgyz Republic and
increase legal protections for investors.                        the former Yugoslav Republic of Macedonia implemented
     Several post-conflict economies, including Afghanistan,      reforms in several areas for the third year in row. Inspired                                                                         Times of Crisis — An Opportunity for Reform
Rwanda and Sierra Leone, introduced new company and              by their neighbors, Kazakhstan, Montenegro and Tajikistan
collateral laws, laying the legal foundations for future mar-    increased reform efforts this past year.                          Guatemala and Peru each reformed in at least 4 areas. And           Regulatory reform can be difficult and take time, par-
kets.                                                                 Governments in the Middle East and North Africa are          3 Caribbean island states reformed for the first time—Gre-      ticularly if legal changes are involved. Some reforms also
     Of course, many challenges remain. Banks in Afghani-        now reforming at a rate similar to those in Eastern Europe        nada, St. Kitts and Nevis and St. Lucia.                       require difficult political trade-offs. It is not surprising that
stan will not increase secured lending tomorrow just be-         and Central Asia . Seventeen of 19 economies reformed                 In Sub-Saharan Africa 29 of 46 economies reformed in       most reforms recorded by Doing Business in 2008/09
cause of new legislation on the use of movable collateral.       in 2008/09. Egypt, Jordan and the United Arab Emirates            2008/09, implementing 67 reforms. As in the previous year,     were aimed at reducing administrative burdens. At least 30
To be effective, new legislation must be well publicized and     were among the most active reformers. In recent years             nearly half the reforms in the region focused on making it     economies improved processes for construction permit-
adopted by both the public and the private sector.               economies in the region have increasingly picked up reform        easier to start a business or trade across borders. In South   ting, property registration or trading across borders, while
     Moreover, regulatory reform does not operate in a           practices from one another. Eight of the region’s economies       Asia 6 of 8 economies reformed. In East Asia and the Pa-       61 eased business start-up. By contrast, only 8 economies
vacuum. New evidence suggests that an economy’s govern-          have reduced or eliminated their minimum capital require-         cific 17 of 24 did.                                             amended collateral or secured transactions laws—and only
ance structure and natural resources influence the motiva-        ment since 2005. Five of these 8 used to have among the               Among OECD high-income economies 17 reformed,              11 amended labor regulations, 7 making them more flex-
tion for reform. But even in difficult circumstances, creating    highest requirements in the world — up to $120,000 in             focusing mostly on easing the corporate tax burden and         ible, 4 opting for more rigidity. Outside pressures are often
a regulatory environment with efficient administrative proc-      Saudi Arabia until 2007. Egypt, Jordan, Morocco, Saudi Ara-       improving property registration systems. Germany created       required to push through substantial legislative changes. In
esses and strong protection of property rights can set the       bia, Tunisia, the United Arab Emirates and the Republic of        a new form of limited liability company, doing away with       this sense the current crisis may represent an opportunity.
stage for firms and investors to take opportunities as the       Yemen all operate one-stop shops for starting a business.         start-up requirements that were more than 100 years old.            Historically, many reforms have been prompted by re-
economy develops. New research suggests that given the                In 2008/09 reforms also intensified in other areas, sim-      Germany is no stranger to regulatory competition.              cession or financial crisis. The East Asian crisis motivated
right conditions, particularly in low-income economies, sim-     plifying processes for getting construction permits, for trad-        In recent years, taking advantage of the common EU         many economies to reengineer their bankruptcy systems.
ple measures can make a difference. Analysis of 6 years of       ing across borders and for enforcing contracts through the        market, German limited liability companies increasingly        Some, such as Singapore and Thailand, reformed laws to
Doing Business reforms finds that in relatively poor but well-    courts.                                                           registered in the United Kingdom, where registration was       strengthen investor protections.
governed economies, a 10-day reduction in startup time                Reforms in Latin America and the Caribbean also in-          easier and less costly, rather than in Germany. The new law         Postcrisis bankruptcy reforms were also carried out in
was associated with an increase of 0.4 percentage points         tensified, with 19 of 32 economies reforming. Colombia,           may reverse this trend.                                        Turkey in 2003/04 and in Colombia in 1999. In the United

72                                                                                                                                                                                                                                                              73
In Focus   Ease of Doing Business

                                    States the Great Depression prompted the country’s first        it easier to start a business, deal with construction permits
                                    comprehensive bankruptcy reform in 50 years. This past          and transfer property.
                                    year 18 economies reformed their bankruptcy regimes, as              But while successful reformers follow a clear direction
                                    measured by Doing Business. This number may increase in         in their policy agenda, they do not hesitate to respond to
                                    the future as economies face the need to deal with system-      new economic realities. Mauritius, the top-ranked economy
                                    ic distress. In times of recession, keeping viable companies    in Sub-Saharan Africa, just announced a new insolvency act
                                    operating as a going concern and preserving jobs becomes        “to maintain the viability of the commercial system in the
                                    especially important. And the more quickly the assets of        country.”
                                    nonviable firms can be freed up, the easier it is to remobi-          Successful Doing Business reformers are comprehen-
                                    lize those assets.                                              sive. Over the past 5 years Colombia, Egypt, Georgia, FYR
                                         France and Germany were among the first to reform          Macedonia, Mauritius and Rwanda each implemented at
                                    bankruptcy systems in response to the current crisis. In        least 19 reforms, covering 8 or more of the 10 areas meas-
                                    Eastern Europe and Central Asia several economies have          ured by Doing Business. This broad approach increases the
                                    recently started to do so. Latvia’s new insolvency law be-      chances of success and impact. Recent research suggests
                                    came effective in January 2008, Lithuania’s in July 2008.       that reforms in different areas tend to be complementary.
                                         And in December 2008 Estonia adopted a new reorgan-        One study finds that after reforms reducing barriers to entry
                                    ization act that establishes a legal procedure enabling dis-    in India, states with more flexible employment regulations
                                    tressed companies on the verge of insolvency to reorganize      saw a 25% larger decrease in informal firms. Other studies
                                    themselves, restructure their debt and take other measures      show that when economies open up their product markets
                                    to restore their financial health and profitability.              to international competition, the benefits are greater if the
                                         Such efforts are timely. The region’s average recovery     cost of entry is lower. Lower barriers to entry allow firms to
                                    rate following bankruptcy is 32%, far lower than the 69% in     move more easily toward industries that most benefit from
                                    OECD high-income economies.                                     trade openness.
                                                                                                         Consistent reformers are inclusive. They involve all rele-
                                                                                                    vant public agencies and private sector representatives and
                                        What Consistent Reformers Do                                institutionalize reform at the highest level. Colombia and
                                                                                                    Rwanda have formed regulatory reform committees report-
                                         As Doing Business has tracked regulatory reforms over      ing directly to the president or prime minister.
                                    the past 6 years, some patterns have started to emerge.              More than 20 other economies, including Burkina Faso,
                                    Regulatory reform tends to pick up when pressure rises.         India, Liberia, FYR Macedonia, the Syrian Arab Republic and
                                    One reason can be increasing competition as economies           Vietnam, have formed committees at the ministerial level.
                                    join a common market or trade agreement, such as the            Reforms in Egypt involved 32 government agencies sup-
                                    European Union or the U.S.–Central American Free Trade          ported by the parliament.
                                    Agreement. Financial crisis and economic downturn are an-            Successful reformers stay focused thanks to a long-
                                    other strong motivation for reform.                             term vision supported by specific goals. Malaysia aims to
                                         So is the need to rebuild an economy following con-        be a fully developed economy by 2020. Colombian Presi-
                                    flict, as in Liberia, Rwanda and Sierra Leone. Whatever the      dent Alvaro Uribe envisions a new Colombia in which, rather
                                    motivation, governments that succeed in sustaining reform       than 60% of the population living in poverty, most would be
                                    programs, as measured by Doing Business, tend to have           counted as middle class. Rwanda aims to become a tech-
                                    common features. To begin with, they follow a longer-term       nology and trade hub in the region. The Kyrgyz Republic
                                    agenda aimed at increasing the competitiveness of their         wants to become the center for regional regulatory excel-
                                    firms and economy.                                               lence in Central Asia, Azerbaijan the gateway to the region.
                                         Colombia, Egypt, Malaysia and Rwanda are all examples           Setting long-term goals and keeping a steady course
                                    of economies incorporating business regulation reforms          of reform might help economies recover from shocks, in-
                                    into a broader competitiveness agenda. Such reformers           cluding the current global financial and economic crisis.
                                    continually push forward and stay proactive. Singapore and      In the words of Egyptian Minister of Investment Mahmoud
                                    Hong Kong (China) rank among the top economies on the           Mohieldin, It is not just a crisis of the economy. It is a crisis
                                    ease of doing business and are also some of the most con-       of economic thinking. It is a crisis that is confusing many re-
                                    sistent reformers. This year Singapore once again tops the      formers . . . [but] whatever crisis you are facing, you need to
                                    rankings on the ease of doing business—for the fourth year      make life easier for those who are endeavoring and working
                                    in a row. And in the past year it continued with reforms, im-   hard to create opportunities for jobs, and this is the least
                                    plementing online and computer-based services to make           that we can be doing.”

74                                                                                                                                                                 75
Feature   Balanceable Creatures


Lee Yang-won is
an artist who made
major contributions
to the development of
contemporary Korean
art with his portraits,
landscapes and wildlife

76                                77
Feature            Balanceable Creatures

In the middle of Korean War, when he         Even though I missed it three times in       one of the most important things of his
just a little boy, Artist Lee Yang-won’s     row, I could still participate in the com-   work- ‘the balance between figure and
family fled Hwanghaedo in North Ko-          petitive exhibition when I was in the        nature’.
rea, to settle down in the South. His        army. I depicted the military lifestyle in         Naturalism and skilled painting
father was an amateur poet and let his       my paintings when I was working as an        of Artist Lee have brought him many
eldest son to do whatever interests          officer at the boarder line,” he said.        words of praises. An art critic Kim
him. Although it was a strain on his              As he noted, for a while, he was        Byung-jong (Seoul National Univ.) said
bank account, Atrist Lee’s father let        on his own, relaying figure painting in      that Artist Lee’s recent works have
him chase his dreams.                        Korea. At present, he has come back          more vitality and also can see through
     In those days, the best thing that a    to Korean art society after quite a          his mind of positive and gladness.
boy could do was painting. With his fa-      long vacuum with a brand new style of        “Artist Lee’s old style was absolutely
ther’s trust and support, a little painter   methods. According to him, as he gets        skilled and shows the general painting
could grow up as a young artist.             older and older, he could get his eyes       of the beauty of line shapes. But now,
     While still a teenager, he could        of childhood back. Something he used         in his age of 70s, his style has changed
enter the Seoul National High School         to overlook, such as a root of plant,        more likely to architectonic with colors
of Art, where he learned not only the        flower, and small animals.                    and balance,” he said.
skills of painting, but also had an op-            Artist Lee retired from teach-               In the old days, he used only
portunity to pursue his passion.             ing several years ago and moved to           Soo-muk (Korean ink) and Hanji (Ko-
     Later, as Artist Lee notes, his         his studio, also his cottage, where he       rean paper). As time and generation
college life in the Seoul National Uni-      could have his own artistic environ-         changed, he started to paint on canvas
versity was the golden age for him.          ment with beautiful nature. “Living in       with a variety of dyestuffs. For the ex-
He won a lot of art competitions and         the countryside, especially with beauti-     pression of calmness, he still uses Ko-                              be flexible to change if he finds better             As long as he can hold his brush,
won many prizes. Though he narrowly          ful landscape and river flow help me         rean materials, but to depict shiny and                              way to improve his expression.                he will keep painting what he feels and
missed the special prize three times         very much to enjoy my work. Also,            designated expression he uses other                                        As Artist Lee’s concurs with crit-      thanking nature, he said. He is quite
in row because of his military service,      when my eyes get tired, I can walk 30        materials as well.                                                   ics’ agreements, he is working on his         healthy for his age of 70s, and still has
he could still hold his ground for a long    meters down to the river for fishing,”             “Change and fusion cannot be                                   fusion art of balanced expression be-         clear sight to see beautiful natures
time in the national competition.            he said.                                     a bad thing at all. Just like how tradi-                             tween naturalism and traditionalism.          around him.
      “I could honorably tell to myself            In his own style of figure paint-      tional music has evolved, art has also                               He said that he is old enough to thank             “My second golden age has just
that the first golden period of my life      ing, Artist Lee is trying to graft natures   found its evolutionary ways by many                                  nature, and experienced and skilled           begun. I hope to leave behind paintings
was at my university. I won the spe-         together. Just like what he has drawn        promising artists these days,” he said.                              enough to express his artistic thoughts       which can be remembered as pieces
cial prize in national art competition       recently, colors and touches show            He added that he is also an artist who                               as well, just like what critics and galler-   of happiness to viewers.”
4 times, although I was just a rookie.       peaceful happiness itself. In fact, it is    is not afraid of challenge and he will     written by Yoo Han-seok   ies said.

78                                                                                                                                                                                                                                                  79
Policy Check   Stimulating Green Growth Related Industries

                                                                                              Current financing by the financial market and the gov-
                                                                                         ernment’s support are not fit for green growth related indus-
                                                                                         tries for the following reasons: 1) the industries have a lot

 Stimulating Green Growth                                    The Korean government
                                                             plans to stimulate
                                                                                         of uncertainties; 2) their return on investment takes longer
                                                                                         to recuperate; 3) their external benefit is larger than that
                                                                                         of other industries; and 4) although private financers offer

 Related Industries
                                                                                         green industry related loans at favorable rates and deal with
                                                             investment in green         green industry related products, the level of support is low,
                                                                                         mainly giving loans to projects of full-fledged technologies
                                                             growth related              while leaving industries in their initial stages of R&D and

                                                             industries. The plans are       Directions of the plan
                                                                                             To attract private investment, the government decided
                                                             aimed at establishing       to remove uncertainties: The government will introduce a
                                                                                         certification system to approve green technologies and
                                                             the financing mechanism      projects, and will verify companies doing green growth re-
                                                                                         lated projects as “green enterprises” if they 40 August 2009
                                                             for green growth related        Plans to Finance Green Growth Related
                                                             industries and expanding        Industries

                                                             investment base to              Policy Issues qualify for the government’s requirements.
                                                                                         To practice the approval system transparently and profes-
                                                                                         sionally, a joint public-private consultation body is planned
                                                             prevent a potential         to be launched with experts home and abroad. Schemes to
                                                                                         nurture green industries will be set up in the third quarter of
                                                             bubble in the industries.   2009, which will include establishing standards for selecting
                                                                                         key areas of green industries based on future exports, com-
                                                                                         mercialization possibilities, and effects on other industries.
                                                                                             Private funds will be invited to participate in green SOC
                                                                                         projects such as building bicycle paths and developing new
                                                                                         & renewable energy, and will be given incentives including
                                                                                         value added tax cuts and eminent domain. Energy Service
                                                                                         Companies (ESCOs)* will be allowed to expand to CO2
                                                                                         reduction and new & renewable energy related businesses
                                                                                         from just energy saving ones, with increased government
                                                                                         investment from 135 billion won in 2009 to 200 billion won
                                                                                         in 2013.

                                                                                         * A company providing energy saving facilities for other
                                                                                           companies short of financing and technology, and recol-
                                                                                           lecting investment from saved energy cost.

80                                                                                                                                                    81
Policy Check      Stimulating Green Growth Related Industries

                                                                                                                                 government will make efforts to establish a foundation to            Detailed plans to support eco-friendly cars and LED
                                                                                                                                 facilitate inducing funding from the private sector. Carbon     lighting, the former to be commercialized and the latter
                                                                                                                                 funds of 100 billion won will be set up in October 2009 to      full-fledged, were made to provide customized financing.
                                                                                                                                 invest in carbon emission rights market in developing coun-     Project financing worth 600 billion won will be provided
                                                                                                                                 tries, followed by carbon emission rights exchange in Korea,    to eco-friendly cars to support facilities investment, while
                                                                                                                                 which will be test run in 2011. To support exports of eco-      parts-supplying associates will access one trillion won of
                                                                                                                                 friendly technologies and projects, the government’s export     bridge loans designed to finance their facilities investment
                                                                                                                                 financing will be expanded from 1.0 trillion won in 2009 to      and business operation until 2012. In addition, financial
                                                                                                                                 3.0 trillion in 2013 with increased government guarantee for    institutions and large corporations will jointly purchase the
                                                                                                                                 exporters. On top of that, a new Social Responsibility Index    associates’ Asset Backed Securities.
                                                                                                                                 reflecting the level of a company’s environment-friendliness          As LED lighting costs much to be replaced for con-
                                                                                                                                 will be developed in order to measure corporate investment      ventional lighting, the government planned to create initial
                                                                                                                                 in green growth related areas. The stock price index only       demand by changing conventional lighting in public entities
                                                                                                                                 for green growth related industries is also planned to be in-   with LED lighting. To financially support public entities sub-
                                                                                                                                 troduced.                                                       ject to replacing with LED lighting, the government fund of
                                                                                                                                                                                                 100 billion won will be made available to LED leasing com-

     Main contents of the plan

    The plans are formulated on the basis of three stages         entail the investment.
of development of green growth related industries.                     “Green funds” of 500 billion won are planned to be
                                                                  formed by the KDB and National Pension Service (NPS) in
      Stage 1: R&D and commercialization                          the second half of 2009. Investment in green industries will
      The government will expand fiscal support from 2.0 tril-     be one of the Economic Bulletin 41 criteria in assessing the
lion won in 2009 to 2.8 trillion in 2013, along with the funds    performance of National Pension Fund, and Private Equity
of 300 billion won collected by the Korea Development             Funds will be allowed to directly invest in SOC projects.
Bank (KDB). SMEs in green growth related industries will               Long-terms deposit products and bonds investing in
be supported with funds exclusive for them, which will be         green industries will be introduced to individual investors,
expanded from 60 billion won in 2009 to 1.1 trillion won in       who will be able to invest up to 20 million won in green in-
2013. Credit guarantees offered to “green enterprises” and        dustry related deposit products, or up to 30 million won in
“green projects” will be increased almost three folds from 2.8    green industry related bonds. Both financial products, hav-
trillion won in 2009 to 7 trillion won in 2013.                   ing three to five years of maturity, will be exempted from
                                                                  capital gain taxes. Deposits and bonds with one year matu-
    Stage 2: The maturing industry                                rity will be given the interest rate of time deposits.
    To support industries in their maturing stage, long-term
funding needs to be available in the capital market, along            Stage 3: The fully-fledged industry
with tax incentives, if necessary, to offset the risks that may       Full-fledged industries attract investors, therefore the

82                                                                                                                                                                                                                                                          83
FTA Watch   Update on Korea’s Free Trade Negotiations

                                                            EU-Korea FTA

                                                             In a recent report, Lee Jong-kyu of Samsung Economic         duction, non-tariff barriers will remain intact such as compli-

Update on Korea’s                                       Research Institute (SERI) notes that the economic effects
                                                        of the Korea-EU FTA will likely be larger than those of the
                                                        Korea-US FTA since the former would boost both imports
                                                        and exports. In particular, given that the Korea-EU FTA will
                                                                                                                          ance to local content ratio, strict environmental regulations,
                                                                                                                          and technological barriers. And there is a likelihood that
                                                                                                                          complicated customs clearance process and discriminatory
                                                                                                                          regulations to foreign companies remain even after the FTA

Free Trade Negotiations                                 contribute to creating a more advantageous export environ-
                                                        ment, Korea would be able to sustain its trade surplus with
                                                        the EU. Korea’s flagship export items, especially automo-
                                                        biles, would be expected to benefit the most, while, on the
                                                                                                                          takes effect. Therefore, companies need to monitor con-
                                                                                                                          tinuously, assess carefully and prepare for the new trade
                                                                                                                               “Korean companies should actively utilize the FTA to
                                                        EU side, the industries of refined chemicals, parts and ma-        enhance their price competitiveness in the EU market.
                                                        terials and large vehicles will become the largest beneficiar-     Korean goods can enjoy a more favorable environment in
                                                        ies.                                                              the EU market thanks to the FTA, as the EU is not likely to
                                                             In the agricultural sector, Korea will likely witness an     seek FTAs with China, the US and Japan for the time being.
                                                        increase in imports of pork and wine. In addition, the EU         Securing more market share in the Western Europe market
                                                        firms will likely make bigger forays particularly in the areas     will help enhance brand and product image.”
                                                        of finance, environment and telecommunication. One of the               Domestic demand-oriented companies should make
                                                        possible side effects of the expected increase in shipments       good use of EU’s global companies which have a weak busi-
                                                        from the EU is options to substitute higher-priced imports        ness base in Korea. They need to seek ways to cooperate
                                                        from elsewhere, the report said.                                  with them including via strategic alliances, M&As and R&D
                                                             “Overall, the Korea-EU FTA should realize a host of pos-     partnerships and shared channels. The market opening can
                                                        itive benefits, including expansion of exports, improvement        be a stepping stone for Korean companies to turn chal-
                                                        in the economic structure and more foreign investment.”           lenges into opportunities, the report concludes.
                                                             As regards the implications of the deal, the SERI re-
                                                        port observes that though the Korea-EU FTA will increase
                                                        imports of competitive EU goods, it will contribute to ad-
                                                        vancing Korea’s economic structure to the next level as the
                                                        EU’s globally competitive industries such as machinery and
                                                        chemicals can complement Korea’s weaknesses. Further-
                                                        more, the trade agreement can improve the chronic trade
                                                        imbalance between Korea and Japan as EU’s machinery,
                                                        chemicals and components will replace Japan’s in the Ko-
                                                        rean market.
                                                             “Thanks to the FTA with the EU, Korea will be able to re-
                                                        duce high dependency on the US by strengthening political
                                                        and economic cooperation with the EU, a balancing force in
                                                        the international community, particularly in Northeast Asia.
                                                        An increase in foreign direct investment and job growth are
                                                        also expected.”
                                                             The Korean government, however, should set up sup-
                                                        port plans about sensitive items which are likely to be af-
                                                        fected by the FTA. Particularly, service, stock breeding and
                                                        agricultural industries are likely to be hit hard and careful
                                                        research and support plans about these industries are nec-
                                                        essary. For industries which will likely undergo restructuring
                                                        and be damaged by the FTA, multilateral analysis should
                                                        be conducted as to possible damages, estimated price-up
                                                        effect of the service sector and impact of scaling down of
                                                        public service on each social class.
                                                             Not only lowering or removing tariffs but also alleviating
                                                        non-tariff barriers should also be analyzed. Despite tariff re-

84                                                                                                                                                                                     85
FTA Watch         Update on Korea’s Free Trade Negotiations

                                                                                                                                                                                                      Colombia-Korea FTA

                                                                                                                                                                                                       Colombia is next target for Korean trade talks. Both the
                                                                                                                                                                                                  countries agreed to begin talks on a free trade agreement
                                                                                                                                                                                                  within the year, the government said after a meeting be-
                                                                                                                                                                                                  tween the two countries’ foreign ministers here. The sides
                                                                                                                                                                                                  wrapped up a five-month joint study on the feasibility of an
                                                                                                                                                                                                  FTA in late August.
                                                                                                                                                                                                       “The ministers agreed to make efforts to get the two
                                                                                                                                                                                                  countries to start official FTA talks within the year on the ba-
                                                                                                                                                                                                  sis of the results of the study,” Foreign Ministry spokesman
                                                                                                                                                                                                  Moon Tae-young said. Colombian Foreign Minister Jaime
                                                                                                                                                                                                  Bermudez arrived in Korea last month, for a three-day stay,
                                                                                                                                                                                                  during which he also met Knowledge Economy Minister Lee
                                                                                                                                                                                                  Yoon-ho, who is in charge of Korea’s commerce and trade
                                                                                                                                                                                                       The Latin American nation has emerged as an attractive
                                                                                                                                                                                                  investment destination for Korean companies that last year
                                                                                                                                                                                                  alone won contracts to develop nine oil fields there. Korea
                                                                                                                                                                                                  National Oil also acquired a 50-percent stake in Peru Petro-
                                                                                                                                                                                                  Tech in February.
                                                                                                                                                                                                       “The outcome is fairly positive and we are thinking
                                                                                                                                                                                                  about beginning the talks,” Bermudez told The Korea Herald
                                                                                                                                                                                                  newspaper in an interview.
                                                                                                                                                                                                       “We are very much interested in developing further re-
                                                                                                                                                                                                  lations with Korea. We want more Korean firms to invest in
                                                                                                                                                                                                  Colombia, to export to Colombia and import from Colombia.
                                                                                                                                                                                                  Besides energy, there are some Korean companies work-
                                                                                                                                    Peru-Korea FTA                                                ing in Colombia’s automotive and electronics industries but
                                                                                                                                                                                                  more can be accomplished specifically in infrastructure de-
                                                                                                                                     Peruvian Foreign Minister Jose Garcia Belaunde said          velopment like roads, ports and airports,” he was quoted as
                                                                                                                                his government hopes to conclude free trade agreement             saying.
                                                                                                                                (FTA) talks with Korea before November. Meeting with Ko-               So there are great opportunities for Korean companies
                                                                                                                                rean President Lee Myung-bak during his three-day trip,           to operate in Colombia and that’s a big market with a lot to
                                                                                                                                Belaunde said Peru wants to wrap up the talks before Presi-       be done, he told the newspaper.
                                                                                                                                dent Alan Garcia visits Seoul. The deal, if signed, will be Ko-
     Australia-Korea FTA                                                                                                        rea’s second trade agreement with a South American nation
                                                                                                                                following its FTA with Chile signed in 2003 and enacted the
      Korea and Australia launched their second round of              Although Australia has been pushing for a trade pact      following year.
talks on a free trade agreement in Seoul last month, and         with Korea for several years, Korea had been delaying the            The foreign minister’s visit follows up on an agreement
discussed issues including tariff concessions and bilateral      talks since its imports from Australia were worth more than    between the Korean and Peruvian presidents, who met last
investment. This round follows talks that took place this May    three times Korean exports to the country, and a finalized      year and agreed to upgrade their countries’ relations to a
in Canberra, Australia. Both the nations exchanged tariff        free trade agreement would likely increase imports of such     “comprehensive partnership.”
concession lists.                                                products as coal and meat even further.                             “I was very pleased to see Peru’s efforts to maintain a
      Korea mainly exports automobiles, mobile phones,                Meanwhile, experts in Korea said that a Korea-Australia   close relationship between the two countries during my trip
color TVs and car parts to Australia, while importing crude      FTA should be ratified as quickly as possible, as neighboring   to Peru last year,” the Korean president told Belaunde.
oil, soft coal, iron ore, aluminum alloy and meat from the is-   countries including China and Japan started negotiations            According to the Korean Chamber of Commerce and
land continent.                                                  earlier. China opened trade talks with Australia in 2005,      Industry, trade between Korea and Peru has increased from
      Last year, bilateral trade between Korea and Australia,    while negotiations with Japan began in 2007.                   $400 million in 2004 to $1.6 billion last year. Korea’s direct
the country’s eighth-largest trading partner, reached $23.2                                                                     investment in Peru totaled $1.18 billion in 2008. Korean
billion. Korea exported around $5.2 billion to Australia while                                                                  firms are seeking to take part in Peru’s ethylene plant con-
importing about $18 billion.                                                                                                    struction project and exploration of uranium.

86                                                                                                                                                                                                                                                             87
FTA Watch        Update on Korea’s Free Trade Negotiations

     India-Korea FTA

    The Korean government has submitted a bill on a com-            The trade accord, if ratified in both countries as sched-
prehensive trade agreement with India to parliament for ap-    uled, will likely take effect as of January 1st, 2010. The CEPA
proval, which could increase bilateral trade considerably.     is expected to boost bilateral trade by as much as $3.3 bil-
    Korea and India concluded the deal, called a Compre-       lion annually, according to estimates by the state-run Korea
hensive Economic Partnership Agreement (CEPA), on Aug.         Institute for International Economic Policy.
7 to cut duties on such goods as auto parts and electronics         The agreement is essentially similar to the free trade
and to boost cooperation between the two Asian economic        agreements Korea has signed with the US, EU and other
powerhouses.                                                   trading partners, but phases out tariffs more slowly.
    The National Assembly will deliberate on the trade deal
during the ongoing parliamentary session, the trade ministry
said. India’s parliament has yet to ratify the agreement.


Expand Your Horizon   Special Report     / 90

                      Committee Wrapup   / 96

                      Company News       / 98

                      Network Club       / 100

90                                           91
EUCCK News          Special Report

The EUCCK organized a special tour of
Yeon-Pung-Mun, the eco-friendly reception
center of Cheong Wa Dae (Blue House)
on July 14th.

                                                                                                                                                                        EUCCK members at Yeon-Pung-Mun, getting a briefing from officials

T h e Ko re a n g ove r n m e n t h a s a n -   and create jobs for 1.56 to 1.81 million                                                Participants were informed that          installed on the roof and center of the
nounced three action plans and 10 pol-          people. The government has decided                                                 this new building has been built by us-       frontside window in order to generate
icies could help it become one of the           to extend investment to private sec-                                               ing sustainable materials, solar panels       electric power. The PV system is com-
top seven green powers in the world by          tors related to green technology and                                               and geothermal technology. For a cost         prised of solar cell module, storage
2020, and among the top five by 2050.            activate green financing through issu-                                             of nearly 3 billion won this designed         battery and power switching device. It
     The three action plans are (1)             ing long term, low interest green bonds                                            two-floors-house is viewed as a model          is an environment friendly system that
measures for climate change and se-             and savings.                                                                       of “green office” and low-rise building       generates electricity using series/paral-
curing energy independence, (2) crea-                Following this “green growth                                                  according to current administration’s         lel circuits.
tion of a new growth engine and (3) im-         strategy”, Cheong-Wa-Dae (The Blue                                                 Green Growth Policy.                               The building is also equipped with
proving quality of life and strengthening       House) has set an example by con-                                                       The symbolic design of the facil-        an energy-conserving heat source
the status of the country.                      structing a brand new reception and                                                ity signifies the traditional value of its    method using geothermal energy,
     To promote green growth, the gov-          information center Yeong-Pung-Mun                                                  location and its public aspect. The use       which supplies stable heat source and
ernment will inject a total of 107 tril-        using environment friendly and sustain-                                            of a transparent design highlights the        saves energy cost. It is a technology
lion won until 2013, which is 2 percent         able alternative energy systems.                                                   importance of clean government and            which uses the temperature difference
of GDP and also twice the amount                     The EUCCK organized a special                                                 offers a convenient space. Throughout         of water, underground water and un-
recommended by the UN for green                 tour of this facility for members, so                                              the building, clean colors and shapes         derground heat for cooling and heating.
investment. The goal is to upgrade pro-         they could understand the concept of                                               have been used to express modernity.
duction worth 182 to 206 trillion won           “green buildings.”                         Mr. Grauhar, Secretary General, EUCCK        Photovoltaic panels have been

92                                                                                                                                                                                                                                  93
EUCCK News   Special Report

                                                                              The EUCCK organized a special monthly
                                                                              luncheon meeting with Mr. Yoon Jeung-
                                                                              hyun, Minister of Strategy and Finance on
                                                                              September 9th.

                                                                              Korea is recovering fast from the global         Given these positive develop-
                                                                              economic crisis, which followed the         ments, the EUCCK organized a lunch-
                                                                              bankruptcy of the U.S. financial house       eon meeting with Minister of Strategy
                                                                              Lehman Brothers last year. In the lat-      & Finance, Mr. Yoon Jeung-hyun who
                                                                              est positive news about the economy,        spoke on “The Korean Government’s
                                                                              Korean manufacturers’ business confi-        Policy Direction for Another Economic
                                                                              dence for September climbed to a near       Takeoff.”
                                                                              two-year high on growing optimism                He noted that faced with an un-
                                                                              about an economic recovery. Accord-         precedented economic crisis, countries
                                                                              ing to Bank of Korea’s business survey      across the world share something in
                                                                              index (BSI) of manufacturers’ expecta-      common: the necessity of active roles
                                                                              tions, the September reading was the        by governments. Thus fiscal expansion
                                                                              highest level since November 2007.          and measures to boost domestic de-
                                                                                   A recent set of indexes measur-        mand have been taking place all over
                                                                              ing sentiment have been on an upward        the world.
                                                                              trend, reflecting optimism that the Ko-           “Korea is not an exception. The
                                                                              rean economy might have passed its          Korean government has taken preemp-
                                                                              worst downturn in more than a decade.       tive and decisive measures, the prior-
                                                                              Korea’s consumer confidence for Au-         ity being economic recovery. We have
                                                                              gust also climbed to the highest level in   introduced the largest supplementary
                                                                              more than seven years. Moreover, the        budget in Korea’s history and front-
                                                                              economy recorded the highest level of       loaded fiscal spending to prevent a
                                                                              GDP growth out of all OECD members          sharp economic contraction. We also
                              EUCCK members listening to MOSF Minister Yoon
                                                                              in the second quarter.                      have taken actions to stabilize financial

94                                                                                                                                                              95
EUCCK News         Special Report

and foreign exchange markets through          tain active fiscal and financial policies,      provide active support so that corpo-                                                             unreasonable burdens on companies.          carbon, green growth” as a national vi-
interest rate cuts and liquidity injec-       including uninterrupted execution of          rate investment can be made despite                                                               Along with these measures, the Korean       sion, using it as a growth engine to pro-
tion,” he said.                               supplementary budget, until economy           difficult economic conditions.                                                                     government will continue its efforts to     mote sustainable growth and to create
     Moreover, the government has             is firmly established on a path to re-             “To that end, we will create a                                                               create a better environment for foreign     new markets and jobs.
pursued job creation and stabilization        covery. It will improve capital flow in a      business-friendly environment more                                                                investment,” Minsiter Yoon said.                 Lastly, Korea will make efforts to
of the public’s livelihood by introduc-       way that ample liquidity in the financial      than anything else. So far, the Korean                                                                 It is encouraging to see foreign in-   advance its service industries. Until
ing job sharing and youth internship          market can be channeled into the real         government has pursued abolishment                                                                vestment in Korea increase 32% in the       now, the Korean economy has largely
programs. In addition to setting up cur-      economy, while utilizing the restructur-      of restrictions on total amount of share                                                          first seven months of 2009 compared         relied on the manufacturing sector. As
rency swap agreements with the US,            ing fund to support the resolution of         holding of other companies, less strict                                                           to last year based on renewed confi-        a result, Korea ranks 29th out of 30
Japan and China; thus easing concerns         non-performing loans.                         separation of banking and commerce,                                                               dence in the Korean economy’s growth        OECD member countries in terms of
on the Korean economy, Korea has                   “We will also carry out close moni-      and deregulation on holding compa-                                                                potential and outlooks for recovery.        the ratio of service industries to the
taken a leading role in international         toring and policy implementation to           nies.”                                                                                                 “However, I understand very well       GDP. The productivity in the service
policy coordination, such as, in G-20         keep the real estate market stable. Re-            In addition to those policies, the                                                           that much still remains to be done for      sector is half that of its manufacturing
and ASEAN+3.                                  cently some have raised the necessity         government will increase tax credit on                                                            Korea to be a more attractive invest-       sector. Thus, the Korean government
     Minister Yoon said that due to the       of normalizing macroeconomic policy           R&D investment in source technologies                                                             ment destination. In this regard, the       will create an environment where the
government’s active efforts and eas-          or the exit strategy. Regarding this, we      and new growth engine industries to                                                               Korean government will increase incen-      service industries can be fostered, cre-
ing of international financial strains,       intend to take a step-by-step approach        the highest level in the world. It will also                                                      tives to attract foreign investment, en-    ating quality jobs and improving eco-
the Korean financial market seems to          depending on the progress of econom-          induce facility investment in the pri-                                                            hance the flexibility in the labor market    nomic fundamentals.
be stabilizing. The Korean economy            ic recovery.”                                 vate sector through capital investment                                                            and remove inconveniences that for-              “We will ease regulations on the
is showing early signs of recovery, so             While managing macroeconomic             and purchase of long term corporate                                                               eign investors may face in doing busi-      entry and operation of key service in-
called “green shoots.”                        stability, the Korean government will         bonds, using capital that will be raised                                                          ness and living in Korea.                   dustries such as education and medical
     Unless unexpected external shocks        implement structural reforms to im-           by this year by institutional investors                                                                Korea will make utmost efforts         treatment, while formulating measures
take place, Korea is likely to achieve        prove the competitiveness of our econ-        like the government, Korea Develop-                                                               to maintain its track record by laying      to support R&D activities in service in-
its trend of positive quarterly growth,       omy. It will push through a restructur-       ment Bank, Industrial Bank of Korea                                                               the foundation for sustainable growth.      dustries.”
reaching the initial target of an annual-     ing plan for companies with unsound           and national pension service.                                                                     The government will pursue an active             Regardless of the nationality of
ized growth rate of negative 1.5%.            financial structure in such industries as           “We will streamline procedures                                                               open economy policy to upgrade the          major investors, both domestic and
     Despite these encouraging eco-           construction, shipbuilding and shipping.      necessary for starting businesses,                                                                competitiveness and productivity of         foreign companies doing business in
nomic indicators, however, a high level       It will also support the financial sector,     while improving systems that shoulder                                                             the economy as a whole. As the next         Korea are same in that they contribute
of uncertainty and potential risks still      resolving non-performing loans by uti-                                                                                                          chair of the G-20 meeting, Korea is         to the Korean economy. For this rea-
remains. Given Korea’s high depend-           lizing the 40 trillion won in restructuring                                                                                                     now leading coordinated international       son, the government and the people of
ence on trade, we cannot afford to be         funds.                                                                                                                                          efforts against protectionism.              Korea see foreign companies as invalu-
complacent.                                        “Meanwhile, we will implement                                                                                                                   “In addition, we will continue to      able economic partners, he said.
     Indeed, some of the sources of           plans to streamline and advance pub-                                                                                                            expand our trade and investment
concern in the international financial        lic institutions including privatization,                                                                                                       partners by ratifying FTAs with large
market include a risk of double-dip           merger and acquisition, and increasing                                                                                                          economies like the US and India in an
recession and volatility of oil and other     management efficiency. We will expe-                                                                                                             expeditious manner and signing FTAs
commodity prices.                             dite preparations for sales of 24 public                                                                                                        with countries such as Australia, New
     There is also the fact that recent       institutions subject to privatization,                                                                                                          Zealand, Peru and the GCC,” he said.
signs of economic recovery in Korea           including Korea Real Estate Investment                                                                                                               In the near future, Korea will
do not seem to stem from the private          & Trust (KOREIT) and Korea Asset in                                                                                                             emerge as an FTA hub by concluding
sector.                                       Trust (KAIT),” he said.                                                                                                                         FTAs with most major economies in the
     Keeping that in mind, the Korean              Corporate investment is one of                                                                                                             world, providing a wide array of differ-
government will maintain its vigilance        the most effective ways to create jobs                                                                                                          ent business opportunities to foreign
in formulating and implementing eco-          and sustain economic growth. In the                                                                                                             companies doing business in Korea as
nomic policies for continued economic         wake of the global financial crisis last                                                                                                        well as domestic companies.
stability.                                    year, governments around the world                                                                                                                   He also observed that the Korean
     “There is a saying that a crisis is an   have offset the reduction in private                                                                                                            government is promoting “low carbon,
opportunity in disguise. I believe that       consumption and investment to a large                                                                                                           green growth” as a way to sustain eco-
the current crisis provides the Korean        extent. However, there is a limit to roles                                                                                                      nomic growth. In the future, economic                            For further details contact:
economy with a new opportunity for            of governments in revitalizing econo-                                                                                                           competitiveness will be determined de-                           Yang Su-kyung, Manager,
another takeoff,” he said.                    mies.                                                                                        Minister Yoon receiving a plaque of appreciation   pending on out-greening. Last year, the                          PR & Media EUCCK
                                                                                                                                           from EUCCK President Mr. Hurtiger
     The Korean government will main-              Thus, the Korean government will                                                                                                           Korean government proclaimed “low                                Tel. 725-9887

96                                                                                                                                                                                                                                                                                       97
Committee Wrapup

HR Training Course
EUCCK HR Committee is launching an industry Training
Course for people who are in charge of the HR tasks
within their workplace.

The course is designed to provide indi-
viduals a broad knowledge of contem-
porary HR issues, hone their existing
knowledge and help clarify common
day to day HR challenges.

The topics covered within the course:         Duration of the course:
                                              15 weeks in total; 3 hour lecture once a
                                              week (every Tuesday from 6pm to 9pm)
 and Industrial Relations
                                              Lecture Venue:
 HRM                                          EUCCK Conference room; 21st Fl. Ho-
                                              tel KUKDO, #310 Euljiro 4-ga, Jung-gu,
                                              Seoul 100-849

The participants will learn about inter-      The course will be in English only.
national best practices and how to ap-
ply these in the Korean workplace.            More information about the course, lec-
The theory learned will be exercised          turers, cost and application process is
through case studies and other prac-          available at EUCCK – eulucie@eucck.
tical exercises implemented into the          org
course curriculum. Participants will
be able to discuss real issues from           As this is the first year of the course,
their working environment with indus-         the number of participants is limited to
try leaders who were involved in the          15 people.
course design.

 Advisory Board Members:                           Steering Committee:
 Mr. Paul Cho – Kim & Chang
 Dr. Anne Cooper – ING Life                        Prof. Woosik Moon - SNU
 Mr. Philippe Tirault – Korn Ferry International   Ms. Shelly Korn - MindsGroup
 Ms. Hyuna CHoi – Watson Wyatt                     Ms. Lucie Lompejova – EUCCK
 Mr. Peter Hatt – SC First Bank

Company News

HSBC Living Finance                                                                   9 7 - 6 CH E O N G DA M 2 - D O N G G A N G N A M - G U S E O U L KO R E A T E L 0 2 5 4 0 3 0 9 4
                                                                                      Interior Design Service available                             www.armanicasa.com
On 12th September 2009, HSBC Ko-                “I am very happy to have a chance
rea held HSBC Living Finance, a finan-     to meet and teach the Korean stu-
cial literacy program for middle school   dents. I hope that HSBC Living Finance
students. The interactive workshop of     will help them plan and build a better
HSBC Living Finance provided students     future,” said John Goddard, EVP and
with an opportunity to easily learn im-   Head of Personal Financial Services
portant financial concept such as iden-    HSBC Korea.
tifying personal goals, differentiating         HSBC Korea launched HSBC Living
‘needs’ from ‘wants’, managing financial   Finance in 2008 to help middle school
risk, and saving and investing money. A   students develop the knowledge and
senior executive and Financial Planners   skills required to make wise financial de-
of HSBC Korea volunteered as a one        cisions.The second HSBC Living Finance
day teacher and shared their experi-      workshop in 2009 is scheduled for 24
ence in wealth management.                October 2009. Participants will be re-
                                          ceived on a first come first served basis.

EUCCK Event   Network Club

EUCCK August Network Club

                             Thanks to all sponsors
                             at the Network Club

                                                               For further enquiries contact :
                                                              Ms. Choi Eun-Jin, 02-725-9994
                                                        or E-mail at eumarketing@eucck.org
                                                      More photographs can be downloaded
                                                      on the EUCCK website: www.eucck.org

102                                                                                              103
EUCCK Event   Network Club

EUCCK September Network Club

                               Thanks to all sponsors
                               at the Network Club

                                                                 For further enquiries contact :
                                                                Ms. Choi Eun-Jin, 02-725-9994
                                                          or E-mail at eumarketing@eucck.org
                                                        More photographs can be downloaded
                                                        on the EUCCK website: www.eucck.org

104                                                                                                105
Overview of Business &
Culture Events

EUCCK Event   Network Club                                                                                                 BUSAN & GYEONGSANG

                                                            The EUCCK Busan office held its monthly social        new managers of member companies. Mr. Michael

Summer Night BBQ Network Club                               gathering ‘Network Club’ on the 20th of August,
                                                            2009 at Seacloud Hotel outdoor VIP lounge. The
                                                            chamber offers incomparable opportunity to
                                                            network with the top executives from European
                                                                                                                 Kim, new general manager of Paradise Hotel
                                                                                                                 and Mr. Rowan Bullock, new general manager of
                                                                                                                 Dpworld, were gladly welcomed and greeted. The
                                                                                                                 next EUCCK Busan network club will be held at
                                                            and Korean companies through this casual             the roof top of Korea Art Center in Haeundae, with
                                                            meeting. In his opening remarks, Mr. Alan Thomson,   a great view of Gwangan bridge celebrating the
                                                            Chairman, EUCCK Busan Office introduced the           Pusan International Film Festival (PIFF)

                                Thanks to all sponsors at
                                the Network Club

                                                                                                                 For further information contact :
                                                                                                                             Judy Yoon, Manager,
                                                                                                                             EUCCK Busan Office
                                                                                                                             Tel : 051 744 6712 or
                                                                                                                         E-mail : eupa@eucck.org

108                                                                                                                                                            109
EUCCK Busan       News Clip                                                                                                                                                            BUSAN & GYEONGSANG

2009 Pusan                                                                                                                         Korea is becoming
International                                                                                                                      No. 1 shipbuilding
Film Festival                                                                                                                      country!

                                                                                                                                   Korea Marine (KORMARINE) will be            of BEXCO and outdoor tent exhibition
                                                                                                                                   held at BEXCO in Busan from Octo-           places with 1,350 booths, 10% increase
                                                                                                                                   ber 21 to 24. This is the only global top   compared with last year.
                                                                                                                                   nominated exhibition in Korea repre-             15 countries such as Germany,
                                                                                                                                   senting Asia area. Even though Korea        England, Netherlands, Norway, Den-
                                                                                                                                   experienced the most difficult indus-       mark, China, Korea, Austria, Finland,
                                                                                                                                   trial situation, KORMARINE continues        USA, Singapore and Italy will join
Entering its 14th year, Pusan Interna-      “Good Morning President”, starring         project market Pusan Promotion Plan         to cruise well.                             KORMARINE as national booths. In
tional Film Festival (PIFF) welcomes all    heartthrob Jang Dong-gun, and close        (PPP). Guests include Josh Hartnett              This exhibition has been held every    particular, Germany dispatched 140
the people interested in movies. The        with Chinese thriller “The Message,”       and Lee Byung hun featuring in Tran         2 years for more than 30 years gain-        companies and USA expanded the
14th PIFF is scheduled to be held from      co-directed by Chen Kuo-fu and Gao         Anh Hung’s “Come With The Rain”, Bry-       ing international reputation based on       booths as it has too many participated
October 8th to 16th, 2009 in Busan.         Qunshu. Also, the festival will screen     an Singer as producer of “Trick’s Treat”,   the active cooperation of shipbuilding      companies. It shows their interest and
The festival was launched in 1996 and       a record 355 films from 70 countries,      and French director Jean-Jacques Bei-       companies, material companies, Busan        attention of Korean market and KO-
was the first festival to ever take place    with 98 world premieres and 46 inter-      neix as head of the New Currents jury.      city government, shipbuilding material      RMARINE. Apart from this, more than
in Korea. It is currently Korea’s larg-     national premieres.                            The Asian Film Market composed          companies’ association and related          2,000 people from 40 countries includ-
est film festival and is known as one of         The festival with motto of “PIFF       of PPP and Busan International Film         organizations. This year’s KORMARINE        ing Poland, Turkey, India, UAE and Hun-
the most dynamic film festivals in the      Bracing for the Future” is continuing      Commission will be held from October        will be held in indoor exhibition halls     gary are expected to participate in this
world.                                      on its quest to discover and introduce     11th to 14th at Seacloud Hotel, Para-                                                   exhibition as individual booths.
    The festival opens its 14th edition     Asian cinema as well as support the in-    dise Hotel and Haeundae Megabox.                                                             At the same time, ISME 2009 will
with local director Jang Jin’s comedy       dustry with its Asian Cinema Fund and                                                                                              be held by the Korean society of ma-
                                                                                                                                                                               rine engineering and the Japan insti-
                                                                                                                                                                               tute of marine engineering and some
                                                                                                                                                                               400 scholars related to shipbuilding will
Container traffic of Busan port                                                                                                                                                 join. This is the first time that this event
                                                                                                                                                                               will be held in Korea and not Japan.
surpasses 1 million TEU mark for                                                                                                                                               The business meeting held by Busan
                                                                                                                                                                               city government and Busan Korea in-
two consecutive months                                                                                                                                                         ternational trade association will be a
                                                                                                                                                                               differentiated strategy from other exhi-
                                                                                                                                                                               bitions for buyers to meet participated
Busan Port is showing signs of recov-       trend. BPA reported that container traf-   is predicted to be able to recover at                                                   companies. Other events such as re-
ery as the world’s shipping companies       fic in August totaled 1.64 million TEU     a rapid rate in the second half of this                                                 ceptions during the period are planned
shake off the recession and get back        including 0.553 million TEU of export      year.                                                                                   and the organizers are receiving many
to business. According to Busan Port        and import and 0.4534 million TEU of           According to an official of BPA,                                                    inquires from many countries for indus-
Authority (BPA), container traffic that     transshipping cargo. In February, Busan    Busan port is going to make efforts                                                     try observation.
was handled at Busan port in August         port’s monthly traffic totaled 0.982 mil-   to promote its strong point regarding                                                        KORMARINE will distribute 10,000
surpassed 1 million TEU (20-foot con-       lion TEU which was the lowest mark.        service to main shipping companies                                                      copies of Daily news to visitors every-
tainer equivalent), the second succes-           Such a result was attributed to       and shippers in South America to re-                                                    day and inform them of various news
sive record since last November when        the relatively increased transshipping     tain its reputation as the world’s fifth                                                on the exhibition promptly. They are
the global economic downturn was in         cargo. Global shipping companies are       biggest port.                                                                           developing tourist products for visiting
full steam.                                 using Busan port as a port for trans-                                                                                              foreigners to experience Korean cul-
      Busan port’s container traffic fore-   shipping to handle the gradually in-                                                                                               ture and preparing other services.
cast is predicted to be on the raising      creased cargo. Therefore, Busan Port

110                                                                                                                                                                                                                    111

is Global
supplier of
paint related
                  Company Profile

Hempel was a pioneer in the produc-
tion of ready-mixed paints for the mari-
time industry In 1915 when the Hempel
Group was established with the motto
of “Quality and Service”, It has since
grown to become a world-wide enter-
                                            HEMPEL Korea Managing director, Mr. Alan Thomson

                                           launched by HEMPEL.
                                                HEMPADUR FIBRE products, rein-
                                           forced with synthetic fibres, provide a
                                           uniquely flexible coating which dramati-
                                           cally reduces the risk of cracking.
                                                GLOBIC NCT is adopting Nano
                                                                                                   Hempel is the world´s #1 supplier
                                                                                               of coatings for wind turbines with ex-
                                                                                               perience dating back to 1980. Those
                                                                                               many years of experience excelled in
                                                                                               coatings for both onshore and offshore
prise comprising 2 Main (in Copenha-       Capsule Technology into exiting anti-               wind turbines.
gen, Denmark, and Barcelona, Spain)        fouling technologies that have been                     Hempel is a capable and valued
and 6 regional (in the US, Bahrain, Sin-   introduced into the self-polishing solu-            partner in terms of protecting all metal
gapore, China, South Korea and Ger-        tions. Hempel’s Globic NCT is giving a              surfaces from deterioration and in
many) R&D Centers, 20 manufacturing        better and safer release control and                terms of ensuring a nice car-like-finish
plants, 49 sales offices and more than      therefore a more precise and cost ef-               appearance of turbines.
130 stock points strategically located     fective specification.                                   Hempel’s global sales and service
around world. Hempel operates within            The HEMPASIL X3 fouling release                organization provides our customers
several strategic segments. These in-      system represents the ultimate state of             with expert assistance during the spec-
clude marine, protective, container,       the art solution in non-stick fouling re-           ifications stage and with on-site advice
decorative and yacht paints.               lease coatings and with a documented                during application, including detailed
     In the mid-1970s, Hempel has been     fuel savings for large vessels of up                reporting to the ship owners and ship-
present in the Korean market. Hempel       to 8-10%, and a corresponding lower                 yards after completion of a job.
Korea is located in Busan, which pro-      CO2-emission.
vides good infrastructure as well as            Hempel’s extensive range of ma-
easy access to customers in the re-        rine coatings offers protection for all
gion. In addition, site offices have been   areas on all type of vessels, at the new
established at the major shipyards and     building stage and for later mainte-
main construction sites to provide the     nance - both onboard and when in dry
high level of sales and technical serv-    dock.
ices for our marine protective paints           It makes that Hempel Korea deliv-
customers.                                 ers premium level of service and prod-
     Marine coatings have traditionally    ucts to Korean customers.
been the core business of Hempel, and           Along with Marine Coatings, HEMP-
Hempel has grown to become one of          EL Korea is one of the leading wind
the most extensive supply networks in      turbine coating suppliers in the market.            HEMPEL Korea
the marine market, servicing marine        Hempel coating are applied on most of               5th Floor, SK Global Bldg, 830-136, Bomil-
customers with uniform products of the     wind turbines installed in Korea such as            2Dong, dong-gu, Busan, Korea
                                                                                               Tel: +82 51 647 5854
same high quality all around the world.    Youngduk in Kungbuk province, heng-
                                                                                               Fax : +82 51 647 6234
     Last year, a number of new in-        seong in Kangwond province, Sungsan,                Email : sales.kr@hempel.com
novative Hi-tech products have been        hankyung in Jeju province and many                  www.hempel.com

112                                                                                                                                         113


                      Company Profile

RINA is one of the world’s leading classifica-
tion societies and is recording strong, con-
sistent growth. It was established in 1861 in
Genova (Italy) and it is founding member in
1968 of IACS (International Association of
Classification Societies). It provides services
on a global scale but still retains the capability
                                                     RINA Korea & Japan country manager, Mr. Giorgio Saletti

                                                     market has been rapid, with over than 120 of
                                                     vessels delivered in the Far East between 2004
                                                     and 2008.
                                                           The orderbook in Korea and Japan for
                                                     the next three years counts more than 60 ves-
                                                     sels of various type including VLCC, Suezmax
                                                     oil tanker, ro-ro cargo, chemical tanker and
                                                                                                                     RINA has established a comprehen-
                                                                                                               sive, strategic network of offices and survey
                                                                                                               stations to provide a prompt and specific
                                                                                                               response to client requests in Asia. Good
                                                                                                               performances during surveys drive RINA to
                                                                                                               excellent results in PSC scores. RINA performs
                                                                                                               testings and certification services in accord-
to offer solutions that take into account the        bulk carriers with an aggregate 3 million GT.             ance with national and international safety
specific needs of the client.                         This growth is the result of RINA’s special ex-           standards and with its own Rules for the Clas-
      Today, RINA classes a high-quality and         pertise in newbuilding services dedicated to              sification of Ships. As a notified body, RINA
diverse fleet of over 24.5 M GT, and has             shipyards.                                                also certifies marine equipment and pleasure
earned a well-deserved reputation for techni-              Although its new building activities in the         craft in accordance with relevant European
cal excellence. It is rated by the Paris MOU as      region cover all types of ships, RINA has ac-             Community Directives (e.g. PPE and MED) In
one of the top three class societies in Europe.      quired a leading position in the construction of          recent years, the worldwide demand for new
Owners and shipyards from around the world           oil and chemical tankers, ro-ro cargo vessels,            ships created by increased globalization has
increasingly choose RINA to class their new-         bulk carriers and etc. RINA began supervising             served the fuel the growth of RINA.
buildings. RINA’s newbuilding orderbook now          the construction of the first two ro-ro passen-                  RINA has become a multicultural group,
stands at over forty per cent of its classed         ger ferries built in Korea in 2000. The opening           providing clients throughout the world with
fleet.                                                of dedicated plan approval centre in Busan in             consistent support, advice and service in a
      RINA leads the cruise and passenger ship       1999 has strengthened RINA’s reputation as a              way they can understand. We look for the best
newbuilding market and the orderbook also            reliable and professional partner in the Korea            people in each country, those who can absorb
includes ro-ros, oil and chemical tankers, bulk      market.                                                   our values and deliver them locally, preserving
carriers and cargo ships. We serve owners and              We enjoys close co-operation with local             the integrity of RINA’s standards while explain-
yards all over the world, with a strong pres-        shipyards, and its rapid response capability has          ing them in the local context. And we have in-
ence in Italy, Korea, China, Turkey, Singapore       produced a significant number of newbuilding               vested heavily in internal training and support.
and Greece. To ensure that customers receive         orders in Asia for new, local customers. The              We have strengthened our teams in Korea by
the rapid service for which RINA is widely           Plan Approval Centre in Korea is staffed by               selecting and training the best engineers and
known, we have widened our global network            experienced, dynamic and professional per-                naval architects. Our experts speak the same
of offices. There are now 97 RINA offices in         sonnel who have had consistent and proven                 language and share the culture of their clients,
32 countries, all staffed by local experts who       success in co-operating with major shipyards.             and they always adhere to the same stand-
speak local language. Plan Approval Centers          In addition to traditional plan approval and              ards.
have been established in Italy, Korea, Turkey,       documentation services, RINA Plan Approval
China, Germany and Greece. Training Centers          Centre can also provide as below.
have been established to help shipyards and
shipowners ensure that their technical staffs
and crews get the training they need.
      A network of centers of excellence is be-           Local consultancy at the pre-con-                         Assessment of the complete life-
ing set up, with the first of these in the UK, fo-         tractual stages of newbuildings or                        cycle of a ship from the initial de-
cusing on yachts, coatings and LNG. Outside               conversions                                               sign phase
commercial shipping, RINA’s special expertise
in yachts makes it the global leader in mega-
                                                          Support to designers on the appli-                        Re-fitting, and upgrading, includ-
yacht classification and certification. The serv-
ices are performed efficiently and competently             cation of newly adopted interna-                          ing rule framework definition and
all around Asia, through our multicultural staff          tional regulations and specific flag                        identification of key aspects
of managers, surveyors and engineers, who                 requirements
serve the needs of our clients, share the same                                                                      Training on the most specific and
passion and pursuit the same goals.                       FEM analysis of any type of vessel                        innovative technical and regula-
      For RINA, Korea has historically been                                                                         tory topics
the most important shipbuilding markets. The
growth of RINA in the Far East newbuilding

114                                                                                                                                                               115
EUCCK Busan              Upcoming Event                                                                                                                                                                            BUSAN & GYEONGSANG

                                                                                                                                                                                                              For further details contact:

Upcoming events in EUCCK Busan                                                                                                                                                                                    Judy Yoon, manager of
                                                                                                                                                                                                                           EUCCK Busan
                                                                                                                                                                                                                 E-mail eupa@eucck.org

EUCCK Busan business
meetings will invite EUCCK
committee directors and the
                                                             Oct. 7th                                                     Oct. 16th Oct. 21th
chairmen of each related
                                                             “ Green Busan policy: Incentives for companies”              “ Network club: Pusan International Film Festival”          “ Legal advice of patent protection”
meetings, together with                                        Paradise Hotel (7:00~10:00)                                  Korea Art Center (19:00~21:00)                              Paradise hotel (19:00~21:00)
local government officers to
                                                              Environment and its protection have played an in-            EUCCK Busan will hold its network club at the rooftop       Legal Counsel of EUCCK IPR Committee will give gen-
provide fruitful information.                                 creasing role in all countries of Europe and particularly    of Korea Art Center, which is a famous restaurant, pro-     eral advice for Busan members who are exposed to In-
                                                              in the European Union. Busan Metropolitan City will in-      viding a great view of Gwangan bridge and Haeun-            tellectual Property infringement of patent, trademark
                                                              troduce the Green Busan policy focusing on the incen-        dae beach. Oct. 16th is the closing ceremony for PIFF       and copyrights in order to amplify the industry voice
                                                              tives for companies and a related case study, which          and 17th is the Gwanganli Firework Festival. For Seoul      to government, public and media to improve IPR en-
                                                              will be followed by presentations by EUCCK Environ-          members who are interested, please reserve your             forcement and create the environment where IPR is
                                                              ment & Energy committee director, Auto Parts and             seats in advance.                                           respected.
Please note that this is a tentative list
and the dates and `venue are subject to change.               Chemical committee chairmen.

Nov. 6th                                                     Nov. 18th                                                    Nov. 24th Dec. 4th
“ Logistic & Transportation forum: BPA & Customs             “ Taxation and Investment Incentive in Korea”                “ The last HR round table in 2009”                          “ The EUCCK Year-end Party”
  office” Novotel Hotel (19:00~21:00)                           Westin Chosun hotel (19:00~21:00)                            Seacloud hotel (19:00~21:00)                                Nurimaru APEC House (19:00~22:00)

 The chairmen of Logistic & Transportation from               The commissioner of Local Tax Office will first give the       Discussion on intense restructuring, massive unem-          We are pleased to inform you that the EU Chamber
 EUCCK will give a speech together with inviting Bu-          most recent data of taxation and the forum will intro-       ployment and job sharing, the pressure of economic          will hold “2009 EUCCK Busan Year End Party” special-
 san Port Authority officers and Local Customs office.          duce the report based on the joint study by EUCCK            slow-down and the overall economic recession. CEOs,         ized network event to welcome the New Year. We are
 The Logistics & Transportation committee constantly          and Samil-PwC and connected with the just pub-               CFOs, HR managers will come together and think of           planning to have a fascinating night by inviting mem-
 argues for more deregulation and better coordination         lished tax legislation changes by MOSF. This meeting         ways to overcome the issues they face in this crisis. In    bers’ family and friends.
 among various transportation facilities such as sea, air,    is also open to financial directors and tax managers of       line with very successful Busan HR round table, you
 roads, and railways.                                         EUCCK members.                                               will receive fruitful information by having productive

116                                                                                                                                                                                                                                            117
Spotlight        The Royal Tombs of Joseon Dynasty

                                                                                                                                                                                               2009 UNESCO, World Heritage

                                                                                                                                                                        The Royal Tombs of
                                                                                                                                                                            Joseon Dynasty

The addition of the Royal Tombs of Joseon Dynasty to            itage, they also epitomize the world view of Koreans, which        Unlike many other tombs, the Joseon Dynasty tombs           the Joseon tombs escaped that fate, with the unfortunate
UNESCO’s World Heritage List has resulted in people’s           has been greatly affected by Confucianism, Buddhism, Feng      have a variety of surviving documents related to their con-     exception of Seolleung (of King Seonjong) and Jeongne-
heightened interest in the tombs. They stand out in a           Shui and others. The royal tombs are especially unique in      struction. Sanneungdogamuigoe, written about the con-           ung (of King Joongjong). While construction technology
number of ways. Throughout the world, it is rare that one dy-   their structure and artistic expression as seen in the stone   struction of the royal tombs, even lists the names of low-      played some part, the fact that only imitations of valuables
nasty lasts as long as 519 years, as the Joseon Dynasty did.    figures that are part of the tombs. The advanced techniques     level workers who took part in the construction, and explains   were buried in the tombs was the main reason the tombs
Also, rare are tombs of kings and queens in as pristine con-    and the temporal trends of Joseon stone arts are well rep-     the arrangement of structures and the construction proc-        remained untouched. This fact also shows that Koreans did
dition as the royal tombs of the Joseon.                        resented by stone rails and stone statues depicting scholars   ess of T-shaped ritual houses in the tombs. Although most       not see royal tombs as places kings can “rule” in the after-
     Not only are the Joeseon tombs a valuable cultural her-    and warriors in the tombs.                                     tombs around the world have been subject to grave robbery,      life, but as resting places.

118                                                                                                                                                                                                                                                     119
Spotlight            The Royal Tombs of Joseon Dynasty

The 33rd UNESCO World Heritage Committee listed                                                                                                                                                              Queen Dowager.
40 out of the 42 royal tombs of the Joseon Dynasty
(2 unlisted tombs are in Gaeseong, North Korea)                                                                                                                                                              wife of King Injo (the 16th king) (Dongguleung)
as World Heritage on June 26th , 2009. Thirty one                                                                                                                                                                 Queen Jang-ryeol became Queen Dowager at the age
of the listed tombs are located in Gyeonggi-do.                                                                                                                                                              of 26 when King Injo died, and remained the elder of the
                                                                                                                                                                                                             royal family through the reigns of three kings (Hyojong,
                                                                                                                                                                                                             Hyeonjong and Sukjong). She and King Injo did not have any
                                                                                                                                                                                                             children together. She became Queen Grandmother when
The Royal Tombs of                                                                                                                                                                                           King Hyojong died. Rival political cliques, Seoin and Namin,
the Joseon Dynasty in Gyeonggido                                                                                                                                                                             fiercely argued about what kind of funeral should be held for
                                                                                                                                                                                                             Queen Jang-ryeol who was King Hyojong’s stepmother.
      Yungneung: the tomb of Jangjo (posthumous
      title, birth name Yiseon) and Queen Heon-gyeong                                                                                                                                                        king) and Queen Myeongseong (Dongguleung)
      Yiseon (1735~1762, also known as Crown Prince Sado)                  both in academics and martial arts, founded Gyujanggak to                                                                             King Hyeonjong (1641~1674), the first son of King Hyo-
was bright from an early age, and excelled in Korean cal-                  foster academic research, established Jangyongyeong (king’s                                                                       jong, was the only Joseon king who was born abroad. He
ligraphy and martial arts. Unfortunately his clash with Noron              guards) and had Suwon Hwaseong (fortress) built. During                                                                           was born in Qing (China), where Crown Prince Bongnim (later
(literally old opinion: a political clique) during his regency on          his reign, Joseon prospered. He continued King Yeongjo’s                                                                          King Hyojong) was being held hostage after the Second
behalf of King Yeongjo led to his premature, horrible death                political policy that aimed at curbing the ills of clique-led                                                                     Manchu Invasion. King Hyeonjong reinforced the military and
where he was locked in a rice chest under the king’s order.                politics, and planned to relocate the capital to Hwaseong           Dongguleung                                                   overhauled the financial system as part of the effort to re-
In 1762, King Yeongjo granted the posthumous title Sado                    (today’s Suwon). His wife Hyo-ui (1752-1821) was a model                                                                          establish the ruling order of the Joseon royal family. He and
(literally thinking and mourning) on Yiseon, lamenting his                 filial daughter-in-law, faithfully attending on Hyegeong-goong   Dynasty (Dongguleung)                                             Queen Myeongseong (1642-1683) had Prince Sukjong and
son’s early death at the age of 28. When King Jeongjo, the                 (Queen Heongyeong). She died childless at the age of 69.            Taejo (literally grand ancestor) Yi Seonggye (1335-1408)      Princesses Myeongseon, Myeonghye and Myeongan.
son of Yiseon ascended to the throne, he elevated Yiseon’s                                                                                 founded a new nation in Gaegyeong (today’s Gaeseong) in
                                                                           Contact Info:
title to Jangheon, which was again escalated to Jangjo in                  Yungneung management office (031)222-0142 hwaseong.cha.go.kr     1392. During his regime of 6 years and 2 months, King Taejo       of King Gyeongjong (the 20th king)
1899. The title of his tomb was also upgraded to Yungneung,                                                                                relocated the capital to Hanyang (today’s Seoul), named the           Queen Dan-ui (1686-1718) was titled Princess in 1696
the tomb’s current name. Hyegeong-goong Hong (Queen                                                                                        new nation Joseon, and laid the ground work for the Joseon        and later became Queen when King Gyeongjong was
Heongyeong) was named Princess in 1744 by King Yeongjo                          Gwangneung: the tomb of King Sejo                          Dynasty.                                                          crowned.
and received the title Hyebin after the death of Yiseon in                      (7th king) and Queen Jeong-hui
1762. She wrote a memoir titled Hanjoonrok, which reflects                       Sejo, the second son of King Sejong, led a coup in 1453    and Queen Hyeondeok (Dongguleung)                                 and the second Queen Jeongsun (Dongguleung)
the death of her husband Crown Prince Sado, Yiseon.                        and took power after removing ministers including Kim Jong-         King Munjong (1414~1452), the first son of King Sejong,              King Yeongjo (1694-1776) lived the longest-83 years-
                                                                           seo and Hwang Inbo, who were trying to protect his nephew       became Crown Prince at the age of eight and remained              among Joseon kings and stayed on the throne for 52 years.
Contact Info: Yungneung management office 031)222-0142 hwaseong.cha.go.kr   King Danjong. In 1455 he made King Danjong abdicate the         Crown Prince for 29 years, learning about politics and study-     He adopted a policy (known as Tangpyeong) to cure the
                                                                           throne; in 1457 he banished King Danjong to Yeongwol,           ing academics. He finally became King in 1450, only to die         ills of clique-run politics and took care of his people. Ironi-
    Geolleung: the tomb of King Jeongjo                                    where the abdicated died. Although King Sejo’s ascension to     after two years in 1452 due to a fatal illness. His wife, Queen   cally, however, his own son Crown Prince Sado fell victim
    (the 22nd king) and Queen Hyo-ui                                       the throne was immoral and unjust, his achievement as king      Hyeondeok, also died a premature death in 1441 due to a           to such clique-led politics. Queen Jeongsun, at the age of
    As soon as King Jeongjo ascended to the throne he                      was quite impressive. He strengthened the king’s power and      postpartum illness after she gave birth to King Danjong. She      15, became the second wife of 66-year-old King Yeongjo
clarified that he is “the son of Crown Prince Sado” and                    overhauled the system and institutions of Joseon. In order to   was titled Queen after her death.                                 and played a part in the death of Crown Prince Sado. She
made every effort to console the spirit of his father who died             strengthen the king’s power, critically weakened during the                                                                       remained in power well into the regime of King Sunjo (the
a harrowing death locked in a rice chest. The king, gifted                 reigns of ailing King Munjong and young King Danjong, he        the first Queen Ui-in and the second Queen Inmok (Dong-            grandson of Crown Prince Sado), acting as regent. She did
                                                                           reinstated the six-office system, which directly connected      guleung)                                                          not have any children.
                                                                           the king with six government offices (personnel, statistics,        King Seonjo (1552~1608) ruled through the Japanese
                                                                           education, military, judiciary and construction), and rein-     Invasion of 1592 and the second Japanese invasion in 1597.        and Queen SinJeong (Dongguleung)
                                                                           forced the registration and identity tag system. King Sejo      His effort to bring Joseon back to the pre-war state was               King Munjo, the son of King Sunjo, governed on behalf
                                                                           also established a national defense system through the Jin-     not successful because of consecutive years of famine             of the king as Crown Prince Hyomyoeng and adopted many
                                                                           gwan (military system) and revamped the central defense         and political instability. Queen Ui-in (1555-1600) was titled     measures such as employing meritocracy, aiming for politics
                                                                           system with the “Five Defense” system. He also focused on       Queen in 1569 at a coronation for King Seonjo. The couple         for the people. Unfortunately he died a premature death at
                                                                           border security, twice defeating the Nuzhen, the Northern       was childless. Inmok Kim (1584-1632) was named Queen              the age of 22. Queen Sinjeong, by contrast, lived a long life
                                                                           threat. Under his reign, a range of laws were amended and       in 1602 and after four years gave birth to Lord Yeongchang,       of 83 years and swayed the political scene during the latter
                                                                           Gyeonggukdaejeon, the official code of governance, was          the only legitimate son of King Seonjo. However, Gwanghae         years of Joseon. She crowned King Gojong, the second son
                                                                           written.                                                        (the king’s illegitimate son) had Lord Yeongchang killed and      of King Father Heungseon, to keep the Andong Kim family in
                                                                           Contact Info:                                                   placed Queen Inmok under palace arrest. A mutiny named            check and remained a powerful regent.
                                                                           Gwangneung management office 031)527-7105 gwang.cha.go.kr        Injobanjeong reinstated Queen Inmok and she became

120                                                                                                                                                                                                                                                                      121
Spotlight               The Royal Tombs of Joseon Dynasty

king), the first Queen Hyohyeon and the second Queen Hyo-                             she died from postpartum complications seven days after               Seooreung                                                     king’s power and overhauling the overall social system of
jeong (Dongguleung)                                                                  she gave birth to a prince (later King Injong).                                                                                     Joseon. After his first wife Queen Ingyeong died an early
     Geongleung is the only tomb among the Joseon royal                                                                                                titled) and Queen Sohye (Seooreung)                               death, he wed Queen Inhyeon (1667~1701) in 1681. Queen
tombs that has three tombs built side by side. The tomb on                           Queen Inseong (Seosamneung)                                            Deokjong (1438~1457), the first son of King Sejo (the         Inhyeon was dethroned, framed by Concubine Jang, and
the left belongs to King Heonjong (1827~1849), the middle                                 King Injong (1515~1545), who sat on the throne for           7th king) was titled Crown Prince in 1455, but died a pre-        then reinstated in 1694. She died of an unknown illness in
one to Queen Hyoheyon (1828~1843) and the one on the                                 the shortest time among Joseon kings, was magnanimous             mature death at the age of 20. Although Deokjong (Crown           1701. After one year King Sukjong married Queen Inwon
right to Queen Hyojeong (1831~1903). King Hyeonjong was                              and extremely devoted to his parents. When his father King        Prince Uigyeong) was never crowned King, his second               (1687~1757).
the son of King Munjo, who died prematurely when he car-                             Jungjong fell ill, he kept vigil by the bed day and night with-   son’s (Prince Jaeulsan, later King Seongjong) ascension
ried the title Crown Prince Hyomyeong, and succeeded his                             out changing clothes or eating. After the king’s death, he is     to the throne elevated his title to Deokjong. Queen Sohye         of King Sukjong (the 19th king) (Seooreung)
grandfather King Sunjo to the throne. Because he was only                            said to have wept for five months, not even drinking water         (1437~1504) became Princess in 1455 and gave birth to                 Queen In-gyeong (1661~1680) was titled Princess in
8 years old when he became King, Queen Dowager Sunwon                                for several days. Only nine months into his regime, he died       the second son (King Seongjong), two months before De-            1671 at the age of 11 and became Queen when King Su-
acted as regent. Queen Hyohyeon became Queen in 1837,                                of an unknown illness. Queen Inseong (1514~1577) was ti-          okjong’s death. She was very intelligent and wise, and wrote      kjong was crowned in 1674. When she was 20 she died of
but died after six years. Taking her place, Queen Hyojeong                           tled Princess in 1524 and Queen in 1544, when King Injong         the book Naehun on women’s etiquette. She also translated         smallpox. She gave birth to two princesses, who both died
was titled Queen in 1843. King Heonjong and Queen Hyo-                               was crowned.                                                      a Buddhist script from Chinese writing to Hangeul (Korean         young.
jeong had a daughter who died an early death. They did not                                                                                             writing). Upon learning that his mother was ordered to drink
have any other children. King Heonjong’s brutal suppression                          and Queen Cheolin (Seosamneung)                                   poison and kill herself, Lord Yeonsan began to engage in          wife of King Yeongjo (the 21st king) (Seooreung)
of Catholicism, as seen in the Gihye Persecution (1839),                                  King Cheoljong (1831~1863), also known as “Young Boy         immoral acts. Queen Sohye tried to reprimand him, which               According to King Yeongjo’s writings, Queen Jeong-
claimed the lives of many Catholics.                                                 of Ganghwa”, was the great-grandson of Crown Prince Sado          resulted in his assaulting her. Shortly after the incident, she   seong, during the 43 years of her palace life, always greeted
                                                                                     (Jangjo). He was leading a farmer’s life in Ganghwado when        died at the age of 68.                                            him with a smile, loyally served the elders of the family, was
Contact Info:
Dongguleung management office 031)563-2909 donggu.cha.go.kr
                                                                                     King Heonjong died. Because the king did not have any chil-                                                                         always diligent, and extremely devoted to attending to Suk-
                                                                                     dren, after much tumult, King Cheoljong became King at the        and the second Queen Ansun (Seooreung)                            bin Choe, the king’s mother. She died childless at the age of 66.
                                                                                     age of 19. For the first three years of his regime, Queen Sun-         King Yejong (1450~1469) was the second son of King
                                                                                                                                                                                                                         Contact Info:
    Sareung: the tomb of Queen Jeongsun,                                             won ruled Joseon as Queen Regent on his behalf. Although          Sejo and ascended to the throne at the age of 19 when his
                                                                                                                                                                                                                         Seooreung management office 02)359-0090 goyang.cha.go.kr
    the wife of King Danjong (6th king)                                              King Cheoljong governed after then, his kingdom was in fact       bother Crown Prince Uigyeong (Deokjong) unexpectedly
    Queen Jeongsun (1440-1521) was titled Queen in 1454                              controlled by the Andong Kim family and the king’s power          died. King Yejong also died an early death, only 14 months
and lived with King Danjong for three years until he lost the                        was extremely limited. Under his reign the national finance        after his ascension. Queen Ansun (?~1498) became Prin-                 Yeongneung: the tomb of King Sejong
crown to his uncle Lord Suyang (later King Sejo). When King                          was shaken to the core and people were subject to desti-          cess when Queen Jangsun, the first wife of King Yejong,                (the 4th king) and Queen Sohyeon
Danjong was banished to Yeongwol, she was also banished                              tution, which led to a large-scale rebellion throughout the       died from postpartum complications after giving birth to               King Sejong (1397~1450), the third son of King Taejong,
from the palace and was degraded to Lady, never to see                               South and the rapid spread of Donghak and Catholicism.            Prince Inseong, and was titled Queen upon King Yejong’s as-       was titled Prince Choongnyeong in 1408, and later titled
King Danjong again. She lived in Yeonmijeongdong outside                             The legitimate son he had with Queen Cheolin (1837-1878)          cension.                                                          Crown Prince when his oldest brother Prince Changneong
Dongdaemun, longing to see her husband for the rest of                               in 1858 died early, and the King died without heir. Princess                                                                        lost the title. After two months he ascended to the throne.
her life. Upon learning that King Danjong was murdered at                            Yeonghye, who was born to King Cheoljong and Concubine            king), the second Queen Inhyeon and the third Queen Inwon         King Sejong sat on the throne for 32 years and promoted
the age of 17, she is said to have climbed the top of Dong-                          Beom, was wed to Park Yeonghyo, but also died an early            (Seooreung)                                                       development in various fields such as politics, economy, cul-
mangbong (mountain peak), behind Jeongeubwon (today’s                                death.                                                                Despite fierce political wars waged between cliques,          ture and science. His achievements include the creation of
Cheongnyongsa Temple), everyday, looking in the direction                                                                                              King Sukjong (1661~1720) succeeded in strengthening the           Hangeul, the installtion of Jipheonjeon (a research institute)
                                                                                     Contact Info: Seosamneung management office 031)962-6009
of Yeongwol, mourned her husband’s death. After Queen                                                                                                                                                                    and Yukjin (six defense strongholds against the threat from
Jeongsun died at the age of 82, her tomb was named Sare-                                                                                                                                                                 the North), the conquest of Tshushima (of Japan) and many
ung (literally missing tomb) because she had missed King                                                                                                                                                                 others. His focus on science and technology led to many
Danjong all her life. She didn’t have any children. When King                                                                                                                                                            innovative inventions like Cheugugi, a rain gauge. Queen
Danjong was reinstated in 1698 by King Sukjong, she was                                                                                                                                                                  Sohyeon (1395~1446) had eight sons and two daughters,
also reinstated to Queen.                                                                                                                                                                                                more children than any other Joseon Queens. It is said that
                                                                                                                                                                                                                         she was so impeccable in carrying out her duties that no
Contact Info:
Sareung management office 031)573-8124 sareung.cha.go.kr
                                                                                                                                                                                                                         concubines talked ill of her.
Limited opening (If the visit is for research or field investigation, you can apply
for entry at the management office)                                                                                                                                                                                       Contact Info:
                                                                                                                                                                                                                         King Sejong Cultural Heritage Admin. 031)885-3123

                                                                                                                                                                                                                             Nyeongneung: the tomb of King Hyojong
wife of King Jungjong (the 11th king) (Seosamneung)                                                                                                                                                                          (the 17th king) and Queen Inseon
    Queen Jang-gyeong(1491~1515) became Queen in                                                                                                                                                                             King Hyojong (1619~1659, Prince Bongnim), the second
1507 when the first Queen Dan-gyeong was dethroned                                                                                                                                                                       son of King Injo, was given as a hostage to Qing with his
amidst a scandal implicating her father, Sin Sugeun. In 1515                                                                                                                                                             brother Crown Prince Sohyeon after the Second Manchu

122                                                                                                                                                                                                                                                                                    123
Spotlight            The Royal Tombs of Joseon Dynasty

                                                                                                                                                        1897, but died before King Sunjong was crowned. Her grave                                  Pajusamneung
                                                                                                                                                        was placed in today’s Neungdong Children’s Grand Park and
                                                                                                                                                        later transferred to her current tomb site when King Sun-                            of King Yejong (the 8th king) (Pajusamneung)
                                                                                                                                                        jong died. Queen Sunjeong (1897~1966), the second wife                                   Han Myeonghee, the father of Queen Jangsun
                                                                                                                                                        of King Sunjong, lived through the Japanese Aggression, the                          (1445~1461), had a strong desire for power and arranged
                                                                                                                                                        Liberation of Korea and the Korean War, and was converted                            for his daughters’ marriage with the royal family. Queen
                                                                                                                                                        to Buddhism at a later stage in life to alleviate her sorrow. In                     Jangsun, who was beautiful and virtuous, was chosen to be
                                                                                                                                                        1966 she died childless at the age of 73.                                            Princess by King Sejo, her father-in-law, but died a prema-
                                                                                                                                                                                                                                             ture death at the age of 17 due to postpartum complica-
                                                                                                                                                        Contact Info:
                                                                                                                                                        Hongyureung management office 031)591-7043, 592-0821
                                                                                                                                                                                                                                             Queen of King Seongjong (the 9th king) (Pajusamneung)
                                                                                                                                                              Jangneung (        Paju): the tomb of King                                         Queen Gonghye (1456~1474) was another daughter of
                                                                                                                                                              Injo (the 16th king) and Queen In-yeol                                         Han Myeonghye and a sister to Queen Jangsun. She joined
                                                                                                                                                              King Injo (1595~1649) succeeded in removing Lord                               the royal family at an early age and was beloved by the
                                                                                                                                                        Gwanghae and the majority political clique, and ascended                             elders for her courtesy and piety. She died childless at the
Invasion. Upon the unexpected death of Crown Prince So-            Contact Info:                                                                        to the throne. Because of Yigwal’s Rebellion (1624), the First                       age of 19, only five years after she became Queen.
                                                                   Olleung management office 031)855-5228                                                Manchu Invasion (1627) and the Second Manchu Invasion
hyeon in 1645, he was named Crown Prince and ascended
                                                                   Limited opening (If the visit is for research or field investigation, you can apply
to the throne in 1649. King Hyojong brought back order             for entry at the management office)                                                   (1636), he had to leave Seoul and seek refuge respectively                           Jinjong and Queen Hyosun (Pajusamneung)
to Joseon by reducing tax burden and reforming the cur-                                                                                                 in Gongju, Ganghwado and Namhansanseong. Joseon’s                                         King Jinjong (1719~1728), the first son of King Yeongjo
rency system. He also adopted a spirited military policy                Hongneung: the tomb of King Gojong                                              defeat in the Second Manchu Invasion subjected him to                                (the 21st king), became Crown Prince when he was seven,
aimed at defeating the North. He died at the age of 41 in               (the 6th king) and Queen Myeongseong                                            the shame of “three times’ bow on the knees and nine                                 but died after three years. King Yeongjo, then, granted the
1659, without realizing his military ambition. Queen Inseon             King Gojong (1852~1919) was the second son of King                              times’ bow with the head down” to Qing’s representatives in                          title on King Jinjong’s half-brother, widely known as Crown
(1618~1674) was sent to Qing with King Hyojong and there           Father Heugseon (Yi Haeung) and was named King by                                    Samjeondo. Queen In-yeol (1594~1636) gave birth to Crown                             Prince Sado. But Crown Prince Sado was killed amid a clash
gave birth to King Hyeonjong. She was titled Queen when            Queen Sinjeong, the wife of King (posthumously titled) Ik-                           Prince Sohyeon, Prince Bongnim (later King Hyojong) and                              between cliques, locked in a rice chest under the king’s or-
King Hyojong was crowned.                                          jong (Crown Prince Hyomyeong), when King Cheoljong died                              Prince Inpyeong. She died of postpartum illness shortly after                        der. Crown Prince Sado’s son, King Jeongjo, succeeded King
                                                                   without heir. King Gojong and Queen Myeongseong were                                 Prince Yongseong’s birth. The tomb was originally in Unche-                          Yeongjo to the throne. As King Jeongjo attained kingship,
Contact Info:                                                      wed in 1886 and lived through one of the most tumultuous                             olli, Northern Paju, but later moved to the tomb’s current lo-                       his stepfather was posthumously titled King Jinjong. Queen
King Sejong Cultural Heritage Admin. 031)885-3123
                                                                   times of Joseon. His reign suffered through the Military Mu-                         cation because snakes and scorpions had been seen living                             Hyosun, the wife of King Jinjong (1715~1751) outlived her
                                                                   tiny of 1882, the Coup of 1884, the Revolutionary Uprising of                        in the tomb.                                                                         husband and died childless at the age of 37.
     Olleung: the tomb of Queen Dan-gyeong,                        Donghak Peasant Army, the Sino-Japanese War (1894), the
                                                                                                                                                        Contact Info:                                                                        Contact Info:
     the first wife of King Jungjong (11th King)                    Murder of Queen Myeongseong (1895), the King’s Retreat                               Paju Jangneung management office 031)945-9242                                         Pajusamneung management office 031)941-4208 paju.cha.go.kr
     When King Jungjong (Prince Jinseung) deposed Lord             to the Russian Legation (1896) and the Russo-Japanese                                Limited opening (If the visit is for research or field investigation, you can apply
Yeonsan and ascended to the throne, Queen Dan-gyeong               War (1904). Queen Myeongseong was murdered by Japa-                                  for entry at the management office)
was named Queen. However, she was dethroned only seven             nese assassins in 1895. King Gojong stepped down from the                                                                                                                 Admission Information on the Royal Tombs of the Joseon Dynasty
days after the ceremony and banished from the palace be-           throne in 1907 and died in 1919. The queen’s tomb, which                                   Jangneung (      Gimpo): the tomb of King
cause ministers petitioned that her presence in the palace         was initially in Cheongnyangnni (today’s Hongneung Tree                                    (posthumously titled) Wonjong and Queen Inheon
was improper given her relationship with traitor Sin Sugeun,       Garden), was moved to its current location to join King Go-                                King Wonjong (1580~1619), the father of King Injo (the                          March-October                               November-February
her father. He was Lord Yeonsan’s brother-in-law and Senior        jong’s tomb, when the king died.                                                     16th king), was never crowned King during his lifetime; the                           Ticketing             Opening               Ticketing              Opening
Minister, but was killed when Lord Yeonsan was ousted. The                                                                                              title was posthumously granted when his son became King.
                                                                   Contact Info:                                                                                                                                                              09:00~17:30           09:00~18:30           09:00~16:30            09:00~17:30
dethroned queen died childress at the age of 71. She was                                                                                                He was the fifth son of King Seonjo (the 14th king) and is
                                                                   Hongyureung management office 031)591-7043, 592-0821                                                                                                                       *Holiday : Every Monday (Yeongwol Jangneung is open everyday between 9 a.m. and 6 p.m.)
posthumously reinstated to Queen in 1739 by King Yeong-            geumgok.cha.go.kr                                                                    said to have been favored by the king because he was hand-                           *The opening hours may vary for individual tombs.
jong and the titles of her grave and tomb were changed to                                                                                               some, cautious and a great son and brother. He and Queen
respectively Dan-gyeong and Olleung. Although Olleung,                 Yureung: the tomb of King Sunjong                                                Inheon (1578~1626) had three sons, the oldest of which,
consisting of only the Queen’s tomb, does not have stone               (the 7th king), the first Queen Sunmyeong                                         Lord Neung-yang, raised a rebellion (Injobanjeong) and be-
rails or stone screens, it has small walls to protect the tomb.        and the second Queen Sunjeong                                                    came King Injo. When his son became King, he was titled                               Category          Individual                                Group
One pair of stone sheep and another of stone tigers were               King Sunjong (1874~1926), the second son of King                                 King Father and the title of his tomb was elevated to Hong-                           Adults            as listed by the head of Cultural         20 percent discount for
placed to protect the tomb, and a pair of scholars to assist       Gojong and Queen Myeongseong, ascended to the throne                                 wongeong. He was titled King in 1632, which resulted in new                           (age 19~64)       Heritage Administration of Korea          groups of 20 or more
the queen. The tomb also has a square-shaped stone for             in 1907. Shortly after then, in 1910 Korea became a Japa-                            names for his grave and tomb, Wonjong and Jangneung.                                  Children          50 percent of adult admission fee         20 percent discount for
the spirit to sit on, a lamp to disperse the evil, and a pair of   nese colony. King Sunjong’s death in 1926 led to a large                                                                                                                   (age 7~18)                                                  groups of 10 or more
                                                                                                                                                        Contact Info:
stone posts signaling the status of the tomb.                      scale anti-Japanese demonstration on his funeral day, June
                                                                                                                                                        Jangneung management office 031)984-2897 jangneung. cha.go.kr                         * Admission fee and Parking charge may vary for individual tombs.
                                                                   10. Queen Sunmyeong (1872~1904) was titled Princess in

124                                                                                                                                                                                                                                                                                                                             125
Korea Sightings   Yanhwajin Foreigners’ Cemetery

                                                   As someone once said, death is a part       century it was not considered normal      often a sacrificial stone or mini-altar
Welcome to a unique cemetery in Hapjeong-          of life too. Visiting an old cemetery can   or desirable for people to be buried in   before it, where people can perform
dong, Mapo-gu district of downtown Seoul,          reveal hints of so many interesting sto-    a common graveyard, centered around       ancestral veneration ceremonies.
                                                   ries of the past. Traditionally in Korea,   a church or other religious center. But       There is in Seoul one cemetery
where some of the noted foreigners who             people – if they could afford it – were     the coming of modernization, popula-      that stands out from all this: the Yang-
                                                   buried in individual plots on a moun-       tion growth and rising costs of land      hwajin Foreigner’s Cemetery. Ever since
made a big difference in modern Korean             tainside with specific geomantic condi-      have changed that. Still, one hallmark    King Kojong gifted this land to the
society rest in peace.                             tions (the Koreans call it “pung su”; the   of a Korean cemetery is that there is a   growing foreign community in the late
                                                   Chinese “feng shui”). Before the 20th       raised mound above each grave, and        1800s, this hallowed ground has come

126                                                                                                                                                                           127
Korea Sightings   Yanhwajin Foreigners’ Cemetery

to hold the remains and tombstones           the Korean flag and a flag of the cem-        saw no fighting, it seems that shots       this family’s history is right here in this
(not every person memorialized there         etery itself.                               were taken at some tombstones – par-       graveyard, written on the gravestones
actually lies buried there) of over 500           Until a couple of years ago, Yang-     ticularly those of white Russians – as     and a special plaque. Some of the
people.                                      hwajin Foreigners’ Cemetery was under       some are pockmarked and damaged            stones are English on one side and Ko-
     On a recent visit to the cemetery,      the stewardship of the Seoul Union          beyond legibility.                         rean on the other.
the weather was ideal. Young children        Church, which was a church formed                Throughout the cemetery there are          Two Americans who this author
from a local kindergarten were playing       by foreign missionaries of several de-      signs showing maps for each of sec-        had never heard of, Clarence Ridgley
with their teachers in a park beside         nominations in the early 20th century       tions labeled A to I. Some of the more     Greathouse and Brigadier General
the cemetery, and some grounds staff         to serve as a home church for their         prominent missionary and other graves      Charles W. Legendre are buried here.
were weeding and cleaning around the         families, where services would be held      are pointed out here.                      After having worked in Japan, the
graves. There were not many visitors,        in English. In the last couple of years,                                               former as a consul and the latter as an
perhaps because the place doesn’t            management of the cemetery and the          Every stone a story                        advisor, both men arrived in Korea in
feature too prominently on most peo-         building on it has been taken over by       There are many tales to tell. During       1890, and worked for the Royal Court
ple’s tour itineraries. But for anybody      a Korean Church – the Hundredth An-         Japanese occupation a young British        of Joseon as advisors to King Kojong,
who has lived in Korea long enough to        niversary Church. This church sees          man by the name of Ernest Bethell          before dying in the same year, 1899.
learn some of its history, this is a must-   itself as the keeper of the memory of       came to Korea to found a newspaper              Also here is Homer Hulbert. While
see destination.                             the work by foreign missionaries to         – the Daehan Maeil Sinbo – although        an American missionary, he was also
     To find the graveyard, the easi-        spread the gospel in Korea. Hence the       he was later imprisoned for offending      a passionate supporter of Korean in-
est thing to do is take the subway to        cemetery has been relabeled “Yang-          the Japanese colonialists and had his      dependence from Japan from early in
Hapjeong, which lies at the intersec-        hwajin Foreign Missionary Cemetery”         newspaper taken from him. He died in       the 20 th century. After writing books
tion of lines 2 and 6. Come out of exit      by the church, and some effort has          1909 and his grave is here. The stone      and articles (including one in National
7 and walk straight ahead. Cross the         been made to play down the contribu-        is well kept and flowers are still placed   Geographic magazine) in support of a
first street, and you will see to the        tions made by non-religious foreigners      here.                                      free Korea, he was harried out of the
left of you what appears to be a long        whose memories are kept here.                   One large group plot near the back     country by the Japanese colonial au-
above ground tunnel snaking off to the            Nevertheless, their stories are here   contains several generations of the        thorities. When he returned after the
left. This is where the line 2 subway        to see on their gravestones. And what       Underwood family, who served Korea         Second World War, it was to a divided
train comes up from underground to           a stunning variety there is, too. Some      in so many ways: by founding what be-      and fractured Korea. He died in August        old man being taken care of by grateful   the right of the main entrance.
cross the Han River. You need to walk        of the oldest stones have worn away,        came Yonsei University, the Saemunan       1949, too soon to see the tragic war          former orphans.                                Near the Yanghwajin Foreigners’
downhill on the far side of this tun-        while others have stood the test of         Presbyterian Church, medical mission-      that came in the following year. On his             There are many other sections       Cemetery, on the other side of the park
nel, so walk through the small bricked       time. During the Korean War, Chinese        ary work, fighting in World War Two and     gravestone are written the words “I           worth seeing, such as American serv-      and the above ground railway tunnel,
rest-stop and turn left. Go about 100        and North Korean troozps camped             the Korean War, promoting education        would rather be buried in Korea than in       icemen and their family members (not      is a shrine to Catholic martyrs, known
meters, past the police station on your      near here. While the cemetery itself        in Korea, and so on. Over a century of     Westminster Abbey.”                           soldiers who fell in the Korean War,      as Jeoldusan. It is here that Korean
right, and you will see an array of flags.                                                                                                One of the more unusual grave            however, they are elsewhere), a poign-    Catholic converts by their thousands
This marks the entrance to the cem-                                                                                                 markers is the tall stone column that         ant infant section, the grave of Ehwa     were beheaded and thrown off a cliff
etery.                                                                                                                              marks the grave of British Consul to          Woman’s University founder Mary           in the late 19th century by the prince
     The burial ground is intimately                                                                                                Seoul Henry Bencraft Joly (d. 1898).          Scranton, Italian diplomats who died      regent Daewon-gun, who was angry
bound up with the history of Christian                                                                                              One side is carved entirely Chinese let-      over a century ago, but whose graves      at a French warship attack on Korea
missionary activities in Korea, even                                                                                                ters, while the other side once held Ro-      are still visited and decorated by the    in retaliation for the execution of nine
though less than 200 of the 550 or so                                                                                               man letters that have since fallen off,       Italian embassy today, and much more.     French priests. This place is also worth
headstones here belong to missionar-                                                                                                making reading the name or inscription              The cemetery has a website,         a visit. Pope John Paul II visited here on
ies. The first person to be interred here,                                                                                           very difficult. The column itself is very      which is run by the 100th Anniversary     his trip to Korea in 1984.
J.W. Heron, was an American Presbyte-                                                                                               decorative, and topped with what ap-          Church. The site is entirely in the Ko-        Taken together, these places of
rian evangelist who died at the age of                                                                                              pears to be a representation of an urn,       rean language, except for some titles.    memorial for those who have passed
33 in 1880. Workers from many major                                                                                                 although from behind it could be mis-         The cemetery is open to the public        away can make a fascinating and relax-
world Protestant denominations – the                                                                                                taken for an owl.                             most days, and tours are run daily, at    ing, contemplative day trip right in the
Methodists, the Salvation Army, the                                                                                                      Very close by is the only Japanese       10 a.m. and 11:30 a.m. and at 2 p.m.      heart of Seoul.
Baptists – are buried here. The flags                                                                                               person buried in the cemetery: Soda           and 3:30 p.m. English tours are avail-
by the entrance of the park represent                                                                                               Gaichi (1867-1962). He worked tire-           able, but must be booked through the
the countries whose missionaries are                                                                                                lessly for over 20 years looking after        website (look for the words “Visit Res-
buried here: Australia, Canada, Japan,                                                                                              Seoul’s orphans, until the Japanese sur-      ervation” on the website) in Korean, so   This article is written by Jacco Zwet-
Sweden, Great Britain, the United                                                                                                   render in 1945. Invited back in 1961, he      have a Korean friend help you do that.    sloot, Korea.net Staff Writer and Editor.
States of America. They are flanked by                                                                                               spent the last of his days as a 94-year-      Tours start from the education hall, to   Reprinted with permission.

128                                                                                                                                                                                                                                                                129

News                   Hotel

A Very Special 1 Year Anniversary at Lotte Hotel Seoul
                                                                                                                       Lotte Hotel                                  A Genuine Autumn Relaxation At Park Haytt Seoul
                                                                                                                                                                    “Park Experience Package”
                                                                                                                                                                                                                                                                                            Park Hyatt
                                                                                                                            Seoul                                                                                                                                                               Seoul
In 2008, Lotte Hotel Seoul opened PIERRE GAG-          will surely win the hearts of the Korean people. It     events like make-up showcase and lingerie fashion    To avoid the summer heat and surging crowds                                                                 water is falling into the middle of the city in an ex-
NAIRE à Séoul, the first restaurant in Korea run by     is composed of Pierre Gagnaire’s most-loved dish-       show. Complimentary vodka cocktail, beverages        at vacation destinations, an increasing number                                                              perience that is exclusive to Park Hyatt Seoul.
a 3-star Michelin chef, and PIERRE’s BAR,              es which use Korean food ingredients that have          and food will be served. The evening is composed     of people are planning a belated vacation in the                                                                Enjoy a luxurious getaway with full benefits this
                                                       been reinterpreted in a new style. It is a testament    of part one and part two, and male guests will not   autumn. This year, Park Hyatt Seoul presents the                                                            autumn season with Park Hyatt Seoul’s “Park Ex-
the Ladies’ Floor, an exclusive floor for female       to the possibility of Korean cuisine’s globalization.   be invited to the second part of the party.          “Park Experience Package” as a relaxing getaway                                                             perience Package”, perfect to make unforgettable
travelers, in the aims of becoming a global leading    (Price 160,000 won, VAT & service charge exclud-                                                             in the city, made even more rejuvenating with                                                               memories with your loved ones. Prices start from
hotel in commemoration of its 30th anniversary.        ing)                                                    * Inquiries: PIERRE’S BAR Tel. (02) 317-7183~4       the warm sunshine and cool breezes of perfect                                                               KRW 260,000.
PIERRE GAGNAIRE à Séoul and Ladies’ Floor cel-                                                                                                                      autumn weather. The package offers one night’s
ebrate their one year anniversary this fall. Special   * Inquiries: PIERRE GAGNAIRE à Séoul                                                                         accommodation in a luxurious guestroom, a bottle                                                            Period September 1 – November 30
events are lined up for this very special occasion.      Tel. (02) 317-7181~2                                                                                       of premium red wine and a special discount on                                                               Price From KRW 260,000 (prices vary depending
                                                                                                                                                                    breakfast or Weekend Brunch at Cornerstone.          a bottle of Chateau Bellevue red wine will help you    on the room type chosen)
First anniversary of PIERRE                            First anniversary of PIERRE’s BAR!                                                                               With a comfortable, relaxing bed and a spa-      celebrate the autumn season with the full happi-       Inclusions One night’s accommodation in a luxu-
GAGNAIRE à Séoul!                                      PIERRE’S BAR opened in October 1, 2008, togeth-                                                              cious spa-inspired bathroom, Park Hyatt Seoul’s      ness.                                                  rious guestroom / One bottle of Chateau Bellevue
                                                       er with PIERRE GAGNAIRE à Séoul. In celebration                                                              luxurious guestrooms have a 3.4m ceiling and             Served in Cornerstone, “The Park” breakfast,       red wine (valued at KRW 70,000) / Free access to
PIERRE GAGNAIRE à Séoul opened on October 1,           of its first anniversary, this hip nightspot offers an                                                        surrounding glass windows. Breathtaking night        which is available every weekday, or the Week-         the Fitness Studio, Swimming Pool and Sauna
2008. Celebrating its one year anniversary, a very     unforgettable event for the female guests.                                                                   views of the city’s marvelous autumn scenery and     end Brunch, which has revolutionized Gangnam’s         Optional Special discount on breakfast (KRW
special course menu “HOMAGE A SEOUL” is cre-                                                                                                                                                                             brunch culture with the utmost quality and incom-      25,000) or Weekend Brunch (KRW 45,000)
ated to convey deep appreciation to guests who         Manager Frederic Hartwig will stage a special                                                                                                                     parable uniqueness, added to the package at spe-
have given warm and loving support over the past       event on October 9 from 6:00 pm to 2:00 am.                                                                                                                       cial rates.                                            * For reservations, please contact
year. The French word homage means reverence,          Inspired by the Muses, Zeus’ nine daughters pre-                                                                                                                      The package also offers free access to the Fit-      (02) 2016-1234 or (02) 2016-1100.
respect, and appreciation.                             siding over the arts and sciences in the Greek                                                                                                                    ness Studio, Swimming Pool and Sauna, located          * All prices are subject to a 10% government tax:
                                                       mythology, the party is titled “Muse Party”. The                                                                                                                  on the top floors of the hotel. Surrounded by            no service charge applies.
Offered from October 5 through 28, this course         evening is oriented to the female guests with                                                                                                                     3.4 m floor-to-ceiling windows, the infinity pool        PR Contact: Janet Lim (02) 2016-1258 or
                                                                                                                                                                                                                         provides unique views and makes it feel as if the        (010) 9954-2403 / janet.lim@hyatt.com

Saturday Brunch Package                                                                                             Grand Hyatt                                     Special 2009 Chooseok Packages
                                                                                                                                                                    At W Seoul-Walkerhill                                                                   W Seoul-Walkerhill
Grand Hyatt Seoul presents a relaxing “Saturday        Period Until December 18, 2009 (Friday night                                                                 [14 September 2009] W Seoul-Walkerhill of W Ho-      27th until October the 9th, it is designed to meet     Choice for the special Chooseok holiday in
Brunch Package”, which includes a relaxing one         stays only)                                                                                                  tels – the world’s foremost “style” hotel brand of   the needs of hotel guests especially during this       the urban center – W sWagger package
night stay in luxurious accommodations, followed       Price From KRW260,000 (Exclusive of tax & serv-                                                              Starwood Hotels & Resorts Inc. (General Manager:     holiday. Discover what W Seoul-Walkerhill’s Choo-          Celebrating the best Korean Chooseok holiday
by a sumptuous Saturday brunch at The Paris Grill      ice charge)                                                                                                  Nick Heath , / www.wseoul.com) offers two special    seok package will propose.                             at W Seoul-Walkerhill, W hotel presents its own
to help you banish the week’s stress and tension,      Includes One night’s Grand Room accommoda-                                                                   packages for relaxation during this Chooseok holi-                                                          special package. One of the attractions is that you
available only on Fridays.                             tion / Saturday Brunch at the Paris Grill for 2 per-                                                         day period. The package valid from September the     The perfect escape that relaxes your ex-               can chill out in the urban center resort, W hotel.
    Enjoy a fascinating Friday night and a leisurely   sons / Complimentary use of Gym & Indoor Pool /                                                                                                                   hausted body and mind -W ReWard Package                One night with view of Acha Mountain at Won-
Saturday brunch at Grand Hyatt Seoul. The pack-        50% discount at the Sauna                                                                                                                                             Through this Chooseok holiday, W Seoul-            derful room, unlimited beer and wine at Woobar,
age features accommodation in a Grand Room,                                                                                                                                                                              Walkerhill has created W Reward package for la-        located on the first floor, from 6pm unil 9 pm and
followed by a delicious Saturday brunch at The         * Information & Reservations: 02-799-8888                                                                                                                         dies who are especially stressed in this period and    other drinks and food can be produced with 10%
Paris Grill for two, normally priced at KRW55,000        Contact: Yoon Jung Hwang (PR Coordinator)                                                                                                                       this will be a great choice for them to relax. One     discounted price. (Week days includes / Fridays,
per person, complimentary use of the gym and             Phone: (82)(2) 799-8277                                                                                                                                         night at a Wonderful room and its view of Acha         Saturdays, Sundays, max 6 glasses can be given,
indoor pool, and a 50% discount at the sauna.            E-mail: yoon_jung.hwang@hyatt.com                                                                                                                               mountain with the contrast of red and white color      free of charge). Two glasses of cocktail, Bloody
The Paris Grill brunch offers a sumptuous array                                                                                                                                                                          bed sheets, special Chooseok buffet menu for           Mary will be served to your room in the morning
of brunch selections. You’ll find our buffet tables                                                                                                                                                                       two, indoor swimming pool “WET”, and sauna (WA-        and two bottles of sparkling Voss water are there
brimming with selections from the restaurant’s                                                                                                                                                                           TER Zone) for two are included in the package.         for you. Pricing from KRW290, 000 (tax and serv-
daily breakfast, lunch and dinner menus, treat-                                                                                                                                                                          Furthermore, manicure and mini hand massage            ice charge exclusive).
ing diners to the best of the best. Package price                                                                                                                                                                        service vaucher for one that women love and 30%            Why not finishing up your holiday at W Seoul-
starts from KRW260,000 (exclusive of tax & serv-                                                                                                                                                                         off at Style Lab coupon are provided. Lastly, vari-    Walkerhill where you can getaway from the urban
ice charge). Treat yourself to a relaxing weekend                                                                                                                                                                        ous spa treatments at Away Spa are available with      center and relax.
and kiss your stress goodbye, with a Saturday                                                                                                                                                                            the 10% discounted price. Starting from KRW249,
Brunch Package at Grand Hyatt Seoul.                                                                                                                                                                                     100 (tax and service charge exclusive).

                                                                                                                                                                                                                         * When staying for more than two nights, one night
                                                                                                                                                                                                                           is available from KRW150, 000 (breakfast for two /
                                                                                                                                                                                                                           up to 3 nights max / tax and service charge exclu-

132                                                                                                                                                                                                                                                                                                                               133
News                   Hotel

Authentic Italian Cuisine Festival at Urban
Hotel ‘Italian Special Cuisine’ Promotion
                                                                                      Grand Ambassador                                                             Film Festival Package
                                                                                                                                                                                                                                                                             Paradise Hotel
                                                                                                 Seoul                                                                                                                                                                               Busan
Grand Ambassador Seoul welcomes the arrival of                                                             al Salmone, Veal Parmigiana & Mixed grill. Also,        Paradise hotel busan will be presented ‘Film Festi-   ming pool for free. Besides 50% discount at indoor
autumn 2009 with ‘Italian Special Cuisine’ through                                                         Italian-style appetizer buffet is available for lunch   val Package’ from Oct. 9 to Oct.15.                   sauna, 20% discount for screen golf, 10% discount
end of October. The promotion, available at ‘Café                                                          while sparkling wine is complimentary for dinner.                                                             at our restaurant and welcome gift will be present-
de Chef’, is directly organized by the executive                                                           The Lunch Sets are available at 38,000won (Marco        This package includes one night stay at Deluxe        ed.
chef, Mr. Wayne Golding from menu selection to                                                             Polo Set) and 42,000won (Leonardo Da Vinci Set)         room, breakfast for 2 persons at Escoffier and             Remember! This package will be offered for 10
cuisine decoration in order to present a distinctive                                                       while Dinner Set (Michelangelo Set) is priced at        various benefits. It will be provided at 275,000won,   persons everyday on a first-come-first-served ba-
glimpse of authentic Italian cuisine.                                                                      60,000won (subject to a 10% VAT).                       additional charge will be added by room type. (10%    sis.
    The promotion features course menus with                                                                                                                       service charge and 10% tax will be added.)
various main dishes including Fettuccine Car-                                                                                                                          You can use our exotic outdoor spa and swim-      * For more information, please call (051)749-2111~3.
bonara, Chicken Cacciatore, Parmigiano Halibut,                                                            * Information & Reservation:
Grilled Angus Sirloin, Seafood fettuccini, Prosciutto                                                        Café de Chef at 02-2270-3131

About Artnouveau City
                                                                          About Artnouveau City                                                                    Pullman Ambassador
                                                                                                                                                                   Hotel Changwon CITY 7                                                           Pullman Ambassador
Consisted of 226 rooms each equipped with top-          · Free Breakfast                                                                                                                                                 Let’s visit the best of the city, CITY 7. Our premi-        Host to many of the best acts to play in
level furniture and convenient facilities, Artnouveau   · 24-hour Security Service                                                                                                                                       umere destination in the heart of Changwon city. It     Changwon city, the 310 seat CITY 7 theatre fea-
City is for your comfortable rest based on the high-    · Daily Housekeeping Service, Laundry & Dry                                                                                                                      is business destination featuring CECO convention       tures state of the art technology in staging and
tech security system and 24-hour concierge serv-          cleaning                                                                                                                                                       centre, industrial complex, and Masan Free Trade        cinema facilities-perfect for local and international
ice.                                                    · Wake-up Call & Message Service                                                                                                                                 Area.                                                   events.
     Artnouveau City offers residence suites for        · Mail & Delivery Service
business travelers with Crystal Suite, Sapphire         · Traveler’s Guide Service                                                                                                                                       Pullman Ambassador Hotel in CITY 7
Suite and Emerald Suite, and provides highly-           · Hospital Guide & First-aid Service                                                                                                                             Offer a range of 5 star facilities & services to make   * Tel: 055-600-0700 / 0707 or
dignified comfort carefully tailored to demands of       · Iron, Ironing Board, Drying Cart Rental                                                                                                                        your stay comfortable. With array of delicious cui-       email at rsvn@thecity7pullman.com
each customer through luxurious interior design         · Humidifier, Microwave Oven, Transformers Rental                                                                                                                 sine more than over 20 restaurants and bars. And          www.thecity7pullman.com
and hotel-level service.                                · Baby Crib Rental                                                                                                                                               also once you step out from the Hotel there are           www.accorhotels.com
     Artnouveau City provides home entertainment                                                                                                                                                                         CITY 7 shopping mall, it has just about 200 shops
system, systematic kitchen furniture, drum washer,      Rate (excluded 10% VAT)                                                                                                                                          with various seasonal sales on now till October 31.
high speed internet access and hotel services. We       Crystal Suite (52.07m2 / 560ft2) : 174 rooms
have various convenient facilities such as sauna,       132,000won (Daily), 3,300,000won (Monthly)                                                                                                                       Pullman Musical Theatre
fitness club, business center, bar and restaurants       Sapphire Suite (65.22m2 / 702ft2) : 44 rooms                                                                                                                     It opens on October 15th, with famous Broadway
so that you can enjoy comfort life. On the roof, sky    180,000won (Daily), 4,500,000won (Monthly)                                                                                                                       musical “The show girl.” You may be able to enjoy
garden offers various rest places and Breakfast is      Emerald Suite (117.25m2 / 1262ft2) : 8 rooms                                                                                                                     the performance from Tuesday through Friday,
served at the sky lounge on the 18th floor with a        270,000won (Daily), 6,750,000won (Monthly)                                                                                                                       and performing twice a day only (3pm or 7pm). It
fantastic view for free.                                                                                                                                                                                                 costs only 40,000(won) but 7pm performances are
     Artnouveau City which is located beside            * 701-1 Yeoksam-Dong Gangnam-Gu Seoul Korea,                                                                                                                     50,000(won).
Teheran-ro is famous for a good position because          135-080                                                                                                                                                            If you want a big night out, than chose PRIMA
of convenient traffic, shopping and business sur-          Tel : 82-2-560-9000                                                                                                                                            DONNA package. You can stay over a night at ho-
rounding.                                                 E-mail : info@ancsr.com                                                                                                                                        tel at CITY7, 2 theatre tickets and breakfast for 2
                                                          www.ancsr.com                                                                                                                                                  next morning that cost only 180,000(won).

134                                                                                                                                                                                                                                                                                                                               135
News                  Hotel

Upscale Authentic Japanese
Restaurant ‘Miyabi’
                                                                                              Sheraton Incheon                                               “Full Moon Package”
                                                                                                                                                                                                                                                    The Imperial Palace
                                                          Miyabi is a term that was used in the Japanese       * Open from 12:00 - 2:30, 18:00 - 21:30       The Imperial Palace Hotel presents the “Full Moon
                                                      royal court and means “elegant” and “beautiful.”           Location: 2nd Floor                         Package” for a plentiful harvest holiday “Chuseok”,
                                                      Taking inspiration from that heritage, the restau-         Lunch Set from KRW 39,000 to KRW 70,000     which is one of the most important holiday of Ko-
                                                      rant has seating for 98 including booths and seats         Dinner Set from KRW 50,000 to KRW 150,000   rea.
                                                      with views and four private rooms with Zen-motif           Reservations: 032) 835-1714/5
                                                      interior design. Of the four private rooms, three                                                      The package is offered from October 1st till Oc-
                                                      offers seating on tatami style and one is Western-                                                     tober 4th. The cost for this package is 115,000
                                                      style with a table and chairs. These rooms can ac-                                                     won(including tax and service charge). With this
                                                      commodate from eight to 12 persons.                                                                    reasonable price you can enjoy one night in a
                                                          Miyabi offers a variety of choices from sushi                                                      superior room. If you stay 2 nights the price will in-
                                                      and sashimi to full course menus. As accompa-                                                          crease to 200,000 won. For Deluxe Room the price
                                                      niment to your meal, our high quality premium                                                          is 150,000 won for one night and 250,000 won for
                                                      sake brewed in the mountains of Japan is recom-                                                        two nights. Add 4~50,000won for a breakfast buf-
                                                      mended. You may also choose to dine at our Raw                                                         fet for two at our Café “Amiga”. (taxes and service
                                                      Bar and enjoy fresh sushi and sashimi. However                                                         charge not included)
                                                      the thrill of dining at Miyabi comes as you watch                                                          Besides, you may use our fitness center and
                                                      our chefs prepare teppanyaki (recommendation:                                                          the indoor swimming pool for free and get a 10%
                                                      Wagyu beef prepared with your choice of teriyaki                                                       discount in any Restaurant. (Food only)
Miyabi, featuring a dynamic contemporary atmos-       or wahu balsamic sauce) and robatayaki (try aba-
phere and genuine Japanese delicacies, opened         lone or prawn with either teriyaki or miso sauce).                                                     Date 1st October 2009 ~ 4th October 2009
its doors on September 2, 2009 at the environ-            In celebration of the hotel’s opening until Sep-                                                   Price from 115,000 (tax & service charge
mentally-friendly Sheraton Incheon Hotel located      tember 20 if you purchase one bottle of wine at                                                        included)
in Songdo, Incheon’s International Business Dis-      any one of our restaurants you receive a compli-
trict. (www.sheratonincheon.co.kr)                    mentary bottle of wine as our gift.                                                                    * Reservation and information 02-3440-8000

Novotel Daegu City Center
The only International Hotel in Daegu                                                                     Novotel Daegu                                      LOUND of Trendy
                                                                                                                                                             Lounge place                                                                                                  Café 74
“Executive package”                                   Authentic Food Pleasures @ the Square
                                                      The Square Restaurant offers the international buf-                                                    Let’s party at Round!
Novotel Daegu City Center is located in the heart
                                                      fet featuring the best of Asian and Western food
of the business & shopping district, with just min-                                                                                                          Are you planning to have a party in this autumn?
                                                      with its interactive live cooking stations. A splendid                                                                                                          our traditional French dinner menu, with wines and
utes away from the station, airport and Daegu
                                                      view over the city makes the Square and its open                                                                                                                cocktails within 100,000 won per person.
EXCO. Throughout 2009, Novotel Daegu City                                                                                                                    Round at Cheung-Dam has an event to provide the
                                                      air terrace for the ideal place for a business lunch
Center offers a special room package for business                                                                                                            whole 4th floor to customers who want to party.
                                                      or an enjoyable get together dinner.                                                                                                                            Round’s terrace setting guarantees to provide the
                                                          Throughout October, the Square restaurant                                                                                                                   perfect place to have a party and have a round of
- Accommodation in Executive Room                                                                                                                            Plan for birthdays, launch a brand or various
                                                      offers special promotions! Weekday Lunch Buffet                                                                                                                 singing with our brand new karaoke machine!
- VIP buffet breakfast at the Executive Lounge                                                                                                               events suited to your needs at Round, and Round
                                                      with fresh sushi & sashimi, finest roast beef, a wide
- Free access to Sauna & Fitness center                                                                                                                      will assure you and your guests VIP treatment.
                                                      variety of desserts and Escargots of French Style                                                                                                               * www.74LOUND.com
- Complimentary internet (High speed & wireless)                                                                                                             Dinner courses may be arranged, which extends to
                                                      is only 19,000 KRW. For dinner with lobsters, buy 5                                                                                                               +822-517-7412 LOUND
- Free drinks and snacks for Happy Hours
                                                      and get 1 lunch buffet voucher free.
  (18:00~20:30) at the Executive Lounge
                                                      * For enquiry and reservation
Price KRW 159,000+ only (10% VAT will be add-
                                                        Tel: 053-664-1168
ed) / Supplement Executive Suite: + 45,000 KRW

Special “Family @ Novotel”: Free accommodation
and breakfast for 2 children under 16 years old

* For enquiry and reservation
  Tel: 053-664-1111
  E-mail: reservation@novoteldaegu.com

136                                                                                                                                                                                                                                                                              137
News                   Airline

Special Promotions for the online
corporate program for SMEs :
                                                                                                           Cathay Pacific
                                                       * Lounge Access                                         ia which you can find only at Cathay Pacific. Leave
                                                       * Free Upgrade chance for the repeated travelers        your cares behind in the cozy surroundings of our
                                                       * Special gift for the first trip                        new Business Class with its exceptional comfort
                                                                                                               and enhanced privacy.
                                                       Basic benefits for Small Business Solution
                                                       * Highly competitive Business & Economy class           Selling period: From now – 21 Oct. 2009
                                                         fares on Cathay Pacific Airways and Dragonair.
                                                       * Complimentary Marco Polo Club Membership
                                                         (Green Card)                                           Destination              Fare                Min/Max stay

                                                       * Exclusive discounts off for select Cathay Pacific       Europe*         From KRW 2,502,000         3day / 1 month
Welcome to Cathay Pacific’s Small Business Solu-          Holidays Limited Stay-A-While package                  Australia*      From KRW 2,056,000         3day / 1 month
tions. Any company which enrolls during promo-         * Easy access to book and manage travel through         * Europe: London,Rome,Paris,Frankfurt,Amsterdam
tion period will get additional benefits as follows..     on-line                                               * Australia: Sydney,Melbourne,Perth,Brisbane,Adleide,Cairns

Promotion period: 1 Sep. ~ 31 Dec. 2009                If your company meets above conditions,
                                                       Please join and enjoy exclusive benefits and con-
Additional benefits                                     venience of online travel management.                   * This fare is exclusive of taxes, fuel surcharges.
* Lowered the entrance level: Any SMEs that            For more details, please visit www.cathaypacific.       * Terms and conditions apply
  spend a minimum of KRW 7,000,000 on air travel       com/kr
  to Hong Kong and beyond with minimum 3                                                                       For more details and bookings, please contact
  employees flying annually can join this program       Cathay Pacific Business Class Special Fares             Sooyeoon Kim, Direct Sales Team at 02-311-
  called “Small Business Solution”.                    to Europe & Australia                                   2755 or email to sel#cpa@cathaypacific.com
* Launching Special Promotion fares for Business
  Class & Economy Class fares to Hong Kong and         For your successful business, Cathay Pacific offers
  Taipei on Cathay Pacific Airways and Dragonair.       amazing Business Class Fares to Europe & Austral-       Website: www.cathaypacific.com/kr

Book & Check-in Online, and
Print out Boarding Pass at
                                                       Now even possible online
                                                       cancellation of Lufthansa                                               Lufthansa
Home                                                   flight booking!

Spend less time at the airport and spend more          If you should have to cancel a Lufthansa flight, it is
time at home. Now the online check-in and online       now possible to do this online as well. Since 16th
boarding pass are available on Seoul-Frankfurt /       September, 2009 the new online refunds function
Munich routes.                                         enables you to cancel flight bookings quickly and
                                                       easily up to one day prior to the start of your jour-
The process is very simple:                            ney.
Step 1: Check-in online at lufthansa.com with
        E-ticket sent to registered email address.     With one-stop online service save your time for
Step 2: Select your seat                               your loved ones!
Step 3: Print out your online boarding pass
Step 4: Visit Lufthansa baggage drop-off counter
        J25 at Incheon airport.                        lufthansa.com
                                                       click, book and fly
Either travelling with or without checked baggage,
you must visit the baggage drop-off counter to         Reservation:
get the validation stamp from Lufthansa as per         Seoul (02) 3420-0400
required by the airport authority.                     Busan (051) 469-2438

BOARD OF DIRECTORS’ LIST                                                                                                                  EU CHAMBER COMMITTEE LIST

Austria                           Germany                             Embassy of Bulgaria                Embassy of Poland                AEROSPACE & DEFENSE                    CONSTRUCTION COMMITTEE                   HUMAN RESOURCES                         NORTH KOREA COMMITTEE
Mr. Wolfgang Slawinski            Mr. Hans-Bernhard Merforth          Mr. Chavdar Penev                  Mr. Filip Hewelke                COMMITTEE                              Co-Chairman: Mr. Olivier Guilluy         Chairman: Mr. Jonathan R. Holmes        Chairman: Mr. Jean-Jacques Grauhar
Fax: 790-9031                     Tel: 776-6200                       Tel: 02-794-8625                   Tel: 3785-2471                   Chairman: Mr. Jean-Luc Valerio         Tel: 6902-3101                           Tel: 3997-482                           Tel: 725-9947
Email: wolfgang.slawinski@        Fax: 776-6806                       Fax: 02-794-8627                   Fax: 797-0853                    Tel: 798-4925                          Fax: 6902-3190                           E-mail: jonathan.holmes@                Fax: 725-9950
frequentis.com                    Email: cbseoul@kornet.net                                              Email: filiph@kornet.net          Fax: 798-4927                          E-mail: olivier.guilluy@kr.lafarge.com   kornferry.com                           E-mail: eusg@eucck.org
                                                                                                                                          E-mail: eadskor@kornet.net
                                                                      Embassy of the Czech Republic                                                                              Co-Chairman: Mr. Gin Won Kang            Co- Chairman: Mr. Parth Sharma          PR & MARKETING COMMITTEE
Belgium                           Italy                               Ms. Nadia Vlnasova                 Embassy of Romania               AUTOMOTIVE COMMITTEE                   Tel: 467-0022                            Tel: 2200-9270                          Chairman: Dr. Seol Do-won
Mr. Andre Nothomb                 Mr. Michele Corso                   Tel: 725-6765~6                    Mr. Constantin Soare             Chairman: Mr. Trevor Hill              Fax: 796-4692                            Fax: 2200-9662                          Tel: 3459-8811
Tel: 756-0355                     Tel: 518-6051-4                     Fax: 02-734-6452                   Tel: 02-792-4277                 Tel: 6009-0002                         E-mail: gin.kang@fischerkorea.com         E-mail: parth.sharma@                   Fax: 3459-8648
Fax: 756-0354                     Fax: 518-6055                       Email: commerce-seoul@             Fax: 02-794-3114                 Fax: 6009-0098                                                                  mail.inglife.co.kr                      E-mail: seol123@samsung.tesco.com
Email: andre.nothomb@solvay.com   Email: michele.corso@               embassy.mzv.cz                                                      Email: trevor.hill@audi.co.kr          COSMETICS COMMITTEE
                                  kr.marposs.com                                                                                                                                 Co-Chairman: Mr. Klaus Fassbender        Vice-Chairman: Mr. Park Jinho           Real Estate Committee
                                                                                                         Embassy of the Slovak Republic   AUTO-PARTS COMMITTEE                   Tel: 3497-9501                           Tel: 721-2075                           Co-Chairman: Mr. Chris Sausser
Denmark                                                               Embassy of Greece                  Mr. Emil Matejka                 Chairman: Mr. Harry Ha                 Fax: 553-1005                            Fax: 721-3342                           Tel: 6260-3300
Mr. Peter C. Feldinger            Sweden                              Mr. Atan Assios Karapetsas         Tel: 02-794-3951                 Tel: 031-355-6173                      E-mail: kfassbender@kr.loreal.com        E-mail: pjinho@kyobo.com                Fax: 6272-3322
Tel: 02-564-2057                  Mr. Bjoern Allden                   Tel: 754-8292                      Fax: 02-793-1834                 Fax: 031-355-6137                                                                                                       E-mail: c.sausser@
Fax: 02-564-2059                  Fax: 02-598-7533                    Fax: 754-8293                      Email: slovakia@hanafos.com      E-mail: harry@galolkorea.com           Co-Chairman: Mr. Paul                    INSURANCE COMMITTEE                     thegalecompany.com
Email: pcf@novonordisk.com        Email: bjorn.allden@ericsson.com    Email: commercial@emb-greece.org                                                                           Bernard Heeringa                         Chairman: Mr. Friedhelm Schnitzler
                                                                                                                                          BANKING COMMITTEE                      Tel: 6742-0807                           Tel: 3708-2000                          Co-Chairman: Mr. Lee Kwon
                                                                                                         Embassy of Spain                 Chairman: Mr. Charles Pierron          Fax: 6273-8678                           Fax: 3708-2090                          Tel: 011-9017-9437
Finland                           The Netherlands                     Embassy of Hungary                 Mr. Jose Luis Echaniz            Tel: 2195-7601                         E-mail: Paul.Heeringa@                   E-mail: friedhelm.schnitzler@           Fax: 737-9091/3
Mr. Leo Akkila                    Mr. Maik Slijpen                    Mr. Istvan Bakos                   Tel: 736-8454                    Fax: 2195-7600                         Beiersdorf.com                           dkv-korea.co.kr                         E-mail: klee@kimchang.com
Tel: 032-814-6742                 Fax: 031-526-9209                   Tel: 795-6280                      Fax: 736-8456                    E-mail: charles.pierron@sgcib.com
Fax: 032-814-6077                 Email: slijpen@bernabiotech.co.kr   Fax: 797-2110                      Email: seul@mcx.es                                                      ENERGY &                                 IPR COMMITTEE                           TAXATION COMMITTEE
Email: leo.akkila@fibox.fi                                              Email: huembsel@kornet.net                                          Vice-Chairman: Mr. Richard Hill        ENVIRONMENT COMMITTEE                    Chairman: Mr. Ian                       Chairman: Mr. Alex joong Hyun Lee
                                                                                                                                          Tel: 3702-3136                         Director: Mr. Jean Philippe Baudrey      Woodcock                                Tel: 799-0598
                                                                                                                                          Fax: 3702-3137                         Tel: 725-9909                            Tel: 7012-0888                          Fax: 3781-3199
France                            The United Kingdom                  Embassy of Ireland                                                  E-mail: Richard.hill@scfirstbank.com    Fax: 725-9959                            Fax: 3284-2888                          E-mail: alexlee@samil.com
Mr. Jean-Marie Hurtiger           Mr. Robert T. Dencher               Mr. Francis X. O Donoghue                                                                                  Email: eubaudrey@eucck.org               E-mail: lan.woodcock@puma.com
Fax: 02-757-4577                  Tel: 360-1106                       Tel: 774-6455                                                       BEER COMMITTEE                                                                                                          WINE & SPIRITS COMMITTEE
Email: jean-marie.hurtiger        Fax: 393-6196                       Fax: 774-6458                                                       Chairman : Mr. Casper ‘THooft          FOOD & BEVERAGES COMMITTEE               IT-TELECOM COMMITTEE                    Chairman: Mr. Franck Lapeyre
@renaultsamsungm.com              E-mail: robert.dencher@shell.com    Email: frank.odonoghue@dfa.ie                                       Tel: 02-558-8553                       Chairman: Mr. Jozef Hlavac               Chairman: Mr. Kang Uchoon               Tel: 3466-5714
                                                                                                                                          Fax: 02-558-8997                       Tel: 556-2497                            Tel: 2186-5060                          Fax: 3466-5982
                                                                                                                                          E-mail: casper.thooft@heineken.com     Fax: 556-2414                            Fax: 2186-5041                          E-mail: frank.lapeyre@
                                                                                                                                                                                 E-mail: jozef.hlavac@modet.co.kr         E-mail: uchoon.kang @ nokia.com         pernod-ricard-korea.com
                                                                                                                                          CAPITAL MARKETS COMMITTEE
                                                                                                                                          Chairman: Mr. Malcolm Walker           Co-Chairman: Mr. CY Yoon                 Vice Chairman: Mr. Wolfgang Slawinski   Vice-Chairman: Mr. Frank Braillard
                                                                                                                                          Tel: 3703-5003                         Tel: 6001-3865                           Tel: 011-380-5744                       Tel: 6424-1007
                                                                                                                                          Fax: 3703-5350                         Fax: 6001-3867                           Fax: 070-7016-2050                      Fax: 6423-1040

                                                                                                                                          E-mail: malcolm.walker@                E-mail: cy.yoon@danone.com               E-mail: wolfgang.slawinski@             E-mail: frank.braillard@
                                                                                                                                          standardcharteredsecurities.co.kr                                               frequentis.com                          ap.moet-hennessy.com
                                                                                                                                                                                 Vice-Chairman: Mr. Jaeyong Suh
                                                                                                                                          Vice-Chairman: Mr. Andrew Ashton       Tel: 790-1717                            LEGAL SERVICES COMMITTEE
                                                                                                                                          Tel: 3774-0647                         Fax: 790-0163                            Chairman: Mr. John H. Kwon
                                                                                                                                          Fax: 780-0534                          E-mail: jay.suh@gourmetfb.co.kr          Tel: 6007-3088
                                                                                                                                          E-mail: etak@templeton.com                                                      Fax: 6007-3242
                                                                                                                                                                                 HDCV COMMITTEE                           E-mail: jhkwon@otis.co.kr
                                                                                                                                          CFO COMMITTEE                          Chairman: Mr. Kjell Ortengren
                                                                                                                                          Chairman: Mr. Nico Ranke               Tel: 3218-0808                           Vice Chairman: Mr. Paul Rhee
                                                                                                                                          Tel: 3441-7826                         Fax: 511-7439                            Tel: 6003-7532
                                                                                                                                          Fax: 548-5253                          E-mail: kjell.ortengren@scania.co.kr     Fax: 6003-7800
                                                                                                                                          E-mail: nico.ranke@bmw.co.kr                                                    E-mail: psrhee@yoonyang.com
                                                                                                                                                                                 HEALTH-CARE - Medical Devices
                                                                                                                                          Vice-Chairman: Mr. Rolf Hoffmann       Chairman: Mr. Laurent Cupiti             LOGISTICS & TRANSPORTATION
                                                                                                                                          Tel: 829-6616                          Tel: 765-5998                            COMMITTEE
                                                                                                                                          Fax: 841-0784                          Fax: 765-6450                            Chairman: Mr. Thomas Engel
                                                                                                                                          E-mail: rolf.hoffmann.rh@bayer.co.kr   E-mail: laurentcupiti@aol.com            Tel: 3706-3001
                                                                                                                                                                                                                          Fax: 3706-3061
                                                                                                                                          CHEMICALS & AGRO-Chemicals             HEALTH-CARE - Pharmaceuticals            E-mail: thomas.engel@hlag.com
                                                                                                                                          Chairman: Mr. Dietmar Balschukat       Chairman: Mr. Juergen Koenig
                                                                                                                                          Tel: 032-510-2304                      Tel: 2185-3811                           Marine & shipbuilding
                                                                                                                                          Fax: 032-505-2510                      Fax: 2185-3900                           COMMITTEE
                                                                                                                                          Email: Dietmar.balschukat@             E-mail: Koenig@merck.co.kr               Chairman: Mr. Alan Thomson
                                                                                                                                          evonik.com                                                                      Tel: 82-51-646-1411
                                                                                                                                                                                 Vice Chairman: Mr. Wouter Overlaet       Fax: 82-51-647-6234
                                                                                                                                                                                 Tel: 709-0090                            Email: ath@kr.hempel.com
                                                                                                                                                                                 Fax: 709-0182
                                                                                                                                                                                 E-mail: overlaet@seo.

140                                                                                                                                                                                                                                                                                                141

        ARMANI CASA                   AUDI KOREA               BERNA BIOTECH                   DANONE             ERICSSON KOREA LTD.           HOME PLUS GROUP                            HSBC

        KIM & CHANG              PERNOD-RICARD KOREA          RENAULT SAMSUNG                 SAMIL PWC               SAMSUNG S1                 SC FIRST BANK              Yoon Yang Kim Shin & Yu

            AGS                          BAYER               BOUYGUES TRAVAUX                  DEUTSCHE                HEINEKEN                    ING BANK                            JUBILEE
                                                                 PUBLICS                      BANK GROUP

       PHILIP MORRIS              GRAND AMBASSADOR               VOLVO GROUP
                                        SEOUL                       KOREA

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