WASHINGTON -- South Korea offers a safe and stable environment for US investors that is also equipped with a highly skilled workforce, but may be failing to attract as much foreign investment as possible due to its complicated regulations, the US State Department said in an annual report released Wednesday.

In its 2021 Investment Climate Statements, the State Department noted the country offers political stability and public safety, as well as world-class infrastructure and a highly skilled workforce to foreign investors.

"Studies by the Korea International Trade Association, however, have shown that the ROK underperforms in attracting FDI (foreign direct investment) relative to the size and sophistication of its economy due to a complicated, opaque, and country-specific regulatory framework," said the report. ROK stands for the Republic of Korea, South Korea's official name.

The annual report analyzes the business environment of some 170 countries throughout the globe to provide the latest information to US businesses and investors.

"A more benign regulatory environment will be crucial to foster innovations such as fifth generation (5G) mobile communications that enable smart manufacturing, autonomous vehicles, cloud computing, and the Internet of Things -– technologies that could fail to mature under restrictive regulations that do not align with global standards," the report said of South Korea.

The report notes Seoul has taken various steps over the past decade to address regulatory issues, "notably with the establishment of a Foreign Investment Ombudsman to address the concerns of foreign investors."

It also notes the revised Korea-US Free Trade Agreement, which went into effect at the start of 2019, further helps secure US investors' broad access to the South Korean market.

"With a few exceptions, US investors are treated the same as ROK investors in the establishment, acquisition, and operation of investments in the ROK," said the report.

The report also points out what it calls South Korea's "exemplary" response to the COVID-19 pandemic, which apparently helps provide a more stable environment for businesses, as well as foreign investment.

"It has been science-driven, with the Korea Disease Control and Prevention Agency leading from day one," says the report. "Largely due to successful handling of COVID-19, including through sound fiscal and monetary responses, the ROK was able to manage the pandemic without shutting down the economy, and GDP dropped a mere one percent in 2020." (Yonhap)