Choosing a European country to invest in takes tremendous legwork and lawyers to comb through all the details.
Luxembourg has entered the game in Korea by trying to attract foreign investment into the small kingdom.
Companies looking toward investing in Europe first need a European headquarters, then a logistical center and in the near future, once fuel prices climb to higher levels, a manufacturing hub that is located close to their customer base ― Luxembourg believes it can become the ideal location for such enterprises.
“Luxembourg is a small country with commercial neutrality,” said Luxembourg Economy and Foreign Trade Minister Jeannot Krecke.
Luxembourg Economy and Foreign Trade Minister Jeannot Krecke. (Yoav Cerralbo/The Korea Herald)
Because of its small geographical size, Luxembourg offers something that most countries do not: direct access to decision-makers responsible for the country’s economy.
“We bring administrations together, try to solve issues that arise and will arise and offer solutions,” he told The Korea Herald.
Land is scarce in Luxembourg but Krecke assured that Korean firms would be offered land at a lower price than the current going rate.
“They will not be the owner of that land, but it’s a long-term contract,” he said. “We try to fit each case with its own solution.”
The Korea-European Union free trade agreement will also be a big boost for both economies.
The agreement is one of the most comprehensive deals ever signed and includes intellectual property rights, non-tariff barriers and clauses built-in in case something goes wrong in one sector.
Preliminary figures for bilateral exports between Luxembourg and Korea are estimated to increase by 35-40 percent; from Korea, about 25-35 percent.
According to the EU, the automotive and the textile sectors in Korea would benefit the most.
“It will boost the exports on both sides and hopefully the volume of exchange will grow in the same way, and you see that it’s a good agreement because many other countries have asked for similar treatment,” he said.
The one reason why Luxembourg is not on the Korean foreign investment radar, Krecke said, is because of a lack of information on both sides.
“It’s difficult to have Luxembourg on the radar because when you speak about Luxembourg it’s most of the time financial services, but Luxembourg is much more than that,” he said.
Krecke mentioned that Luxembourg has the biggest satellite operator, SES ASTRA, which is looking to make headway into Korea’s media and communications sector.
Luxembourg would also like to have better conditions for their air traffic routes.
Cargolux, one of the leading cargo airlines worldwide, operating scheduled and charter services covering all continents, operates three times a week from Korea.
“Whereas from China they are flying 30 times a week, this is a big difference,” he said and hopes to find avenues to increase the flights by their national carrier.
On the political side, both countries have offered their businesses support by installing framework agreements that fit today’s business needs like the avoidance of double-taxation.
By Yoav Cerralbo (firstname.lastname@example.org