[ Investment > The Ombudsman's Office At Work ]

hat a difference a decibel or two makes. So Honda Motorcycle of Japan discovered when it began importing machines to retail through its Korean subsidiary in May 2002 since the profitability of its operation was compromised from the outset by the need to meet Korea¡¯s stringent noise emission regulations.

  While the regulations on motorcycle noise emission as stipulated by the Ministry of Environment (MoE) are based on those of the European Union, Korean methods of noise measurement differ from the EU¡¯s. What¡¯s more, unlike Europe or Japan, Korea does not allow tolerance limits on noise levels, so effectively raising the bar for Honda in its efforts to gain approval for its motorcycles to be legitimately driven on Korean thoroughfares.

  Specifically, Korean (and EU) regulations impose a limit of 75dbs on machines of up to a capacity of 80cc, 77dbs on those of capacities between 81cc and 175cc, and 80dbs on those bikes of 176cc and above. However, while the EU measures the average noise level from different tests, Korea takes only the top level of noise among such tests. Furthermore, given that motorcycle noise measurement is far from being an exact science, the EU (and Japan) allow tolerances of 2dbs on all limits, whereas Korea does not.

   THE CASE AGAINST INCONSISTENCY These seemingly small differences made a big difference to the acceptability of Honda machines to the point that they required costly adaptation to reduce their noise emission levels. This meant higher costs and lower productivity - a problem Honda Motorcycle Korea president, Jeong Woo-Young, complained about to Jung Dong-Sik, general manager of the Korea Investment Service Center (KISC). Mr. Jung responded by referring the matter to KISC¡¯s Office of the Investment Ombudsman.

  Within the Office, Kim Deok-Joon a counselor with special responsibility for legal matters, and Park Byung-Yeol were charged with satisfactorily resolving the issue.
  ¡°I learned from Mr. Jung about Honda Motorcycle¡¯s concerns,¡± said Mr. Kim. ¡°I subsequently visited their offices where they explained the problems that were being created for their company by Korean noise regulations.¡± Mr. Kim duly studied the Korea regulations and those of the EU that they were modeled on and formed a case arguing for greater tolerance in the interpretation of motorcycle noise testing, as per European practices.

  Mr. Park then approached the Traffic Pollution Division of the Ministry of Environment to argue the case, pointing out the inconsistencies in the regulations in that they were based on EU standards without European tolerances. Furthermore, Mr. Park underlined the impact of the adaptations Honda was forced to make, including reducing engine performance, raising fuel consumption and forcing higher costs upon the consumer.

   FROM STREET TO HIGHWAY Mr. Park also pointed out that the regulations were effectively serving as a barrier to foreign trade and investment and threatened the economic lifeblood of Korea.

  The ministry accepted the Ombudsman¡¯s argument in principal and is now committed to introducing tolerance limits in measuring motorcycle noise emissions. While the MoE prefers an increase of 1 db out of environmental considerations Mr. Kim has made it clear that its client ¡°is not satisfied¡± with the response and that he intends to press the issue until Korean regulations are in line with international standards on this point.



  In the meantime, appreciative of his efforts on its behalf so far, Honda Motorcycle Korea wants Mr. Kim to take on another area of regulation that impedes its business activities in Korea: the law that bars motorcycles from the highways. If the Ombudsman¡¯s office is successful in having this regulation struck down, a new market for Honda¡¯s powerful and comfortable touring bikes will be opened.

  Honda¡¯s request is a testimony to its confidence in their champion, Kim Deok-Joon and to the overall professionalism of the Ombudsman¡¯s Office, the premier governmental institution dedicated to pushing forward the frontiers of regulatory change on behalf of foreign business.