The Republic of Korea (Korea) is one of East Asia's most vibrant democracies and the world's 15th largest economy. Since Korea's transition to democracy in 1987, its economy has been dominated to a significant extent by large conglomerates, or chaebols. The country has sophisticated electronics, telecommunications, automobiles, and shipbuilding industries. Nonetheless, business growth in the Republic of Korea is still hampered by excessive regulation, insufficient regulatory transparency, underdeveloped corporate governance and pervasive corruption.

Positive developments in relation to corruption and investment:

• In order to improve the national integrity systems and to eradicate corruption, the Korean government has pursued an extensive anti-corruption agenda, digitalising the public services through a sophisticated e-governance and establishing one-stop shops in order to reduce the opportunities for bribery.
• Incentives such as SME tax support, tax relief, investment tax credit, custom duties reduction or exemption, assistance with site location and acquisition, provision of cash grants and other types of financial support are granted to foreign investors and foreign SMEs in Korea.
• Many businessmen and officials, including former ministers and former presidents, have been found guilty of corruption in recent years, sometimes for offences committed years earlier.

Risks of corruption:

• Excessive bureaucracy, weaknesses in corporate governance, inconsistent application of laws and regulations, and non-transparent regulatory processes are among challenges encountered by companies in Korea.
• Despite significant improvements in recent years, Korea's political structure still tolerates a degree of non-transparency in the formation of laws and regulations, which when combined with still-inadequate institutional 'checks and balances' and a societal structure heavily based on nepotism can create opportunities for corruption and influence peddling.
• According to the OECD Report on the Implementation of the Phase 2 Recommendations 2007, concerns remain that the measures for preventing and detecting foreign bribery in Korea are not sufficiently effective.
• The merger of the Korean Independent Commission Against Corruption (KICAC) with two other government institutions to form a new Anti-Corruption and Civil Rights Commission (ACRC), has raised concerns about the ACRC’s ability to focus on corruption issues, and its independence from the government.