Interviews: Mr. Pierre Vaquier, Chief Executive Officer, AXA Real Estate & Mr. Frank Khoo, Global Head of Asia

The AXA Group has been managing real estate portfolios for over 30 years. The different real estate units were consolidated with the strategic decision in 1999 to create AXA Real Estate Investment Managers. This was done so to complete the consolidation
of AXA’s real estate management capabilities throughout Europe.
At the same time, it was considered that there was a significant opportunity to leverage this infrastructure, in order to become a leading panEuropean real estate investment manager offering services to both external institutional investors as well as existing AXA clients.
Since 2006, AXA Real Estate Investment Managers has expanded its presence in Asia with offices in Tokyo and Singapore. In 2010, AXA Real Estate Investment Managers
became AXA Real Estate and expanded its global footprint with the creation of a capital raising team based in the United States.
As noted by Mr. Frank Khoo, Global Head of Asia, AXA Real Estate, today, the company is the world’s second largest real estate fund and asset manager, and the largest in Europe, with €40 billion of assets under management. It has over 120 external institutional clients spread across the world, in addition to managing funds for around 10 AXA insurance companies.
“With 500 real estate people operating in 22 countries, AXA Real Estate's competitive advantage stems from its global fund management expertise combined with extensive on-the-ground deal sourcing, asset management and development execution capabilities,” he said.
The company structures and actively manages investment products, seeking wide-ranging opportunities along the risk spectrum to deliver targeted returns commensurate with clients' risk profiles, through a variety of investment strategies.
These range from core to opportunistic, country-specific to geographically diversified, sector-specific to multi-sector, with the capacity to invest at all levels of the capital structure.”
“Our core business is real estate fund, asset, and development management. We have extensive local expertise in all of the major property types. In addition, AXA Real Estate offers specialist local expertise in areas such as transaction execution, development, asset and project management, tax, legal, accounting, risk management and compliance.”
Mr. Khoo joined the company in 2008 to help the company expand its operation in Asia. Appointed as Global Head of Asia, based in Singapore, he coordinates the development of the company’s investment and asset management activities in the region.
He also manages the development of investment platforms in Japan and has set up a local presence in other parts of the region which are important to AXA Real Esate’s strategy. He has contributed to the launch of Asian investment funds to develop its asset base in Asia on behalf of its clients.
With over 15 years in the investment industry, he has extensive experience in private equity and real estate and a deep knowledge of all the Asian markets. His expertise in deal sourcing and execution as well as fund launches have contributed widely to the company’s ambitions to become a major player in the Pan-Asian real estate investment industry.
In addition, Mr. Khoo has also been appointed as Co-Chairman of the EUCCK Real Estate Committee and will be coordinating its activities, seeking to give is wider exposure in Singapore and other Asian markets.
Speaking on this new role with the chamber, he noted that the Committee has already established itself as one of the premier platforms for Real Estate professionals in the region, having organized highly reputed international conferences and meetings. As Co-Chairman, he hopes to contribute towards expanding its activities and raising its profile even more.
Speaking on the priorities for AXA Real Estate, he noted that global growth remains a key priority and AXA Real Estate is currently expanding its presence in both the US and Asia, most recently with the launch of its US platform last year.
He also noted that the company signed an agreement with The Sumitomo Trust and Banking Co Ltd (STB), one of the largest trust banks in Japan, formalizing plans to jointly set up a new investment fund for Japanese real estate.
“Over the past three years, we have substantially expanded our operations across the Asia region, establishing the new Asian headquarters in Singapore, announcing a memorandum of understanding with China’s Ping An Trust to co-invest in developing residential projects in China and also the deal with STB.”
These developments were the next step in AXA Real Estate’s plans to offer a diversified range of Asian real estate opportunities to institutional investors, in complement to the firms established European capabilities, he said.
“We already had an existing team on ground in Japan, but we chose to tie up with Sumitomo as we feel that this tie up will greatly enhance our execution ability in Tokyo both from the aspect of deal sourcing and asset management.”
There is no doubt that investors are now recognising that the pace of growth in the Asian property market is likely to outpace that of both the US and Europe. As such, they are increasingly prepared to consider exposure to the region when building up a balanced global strategy, he added.
He said that in general there was a ‘three-tier’ approach emerging in terms of investors' attitude. One for countries like Japan, which as the most mature Asian market, offers investors core investment characteristics especially on good quality commercial assets. The next for ‘semi-developed’ markets like Korea, Singapore and Hong Kong, while the last for the emerging Asian markets like China and India.
The emerging markets are more opportunistic and therefore are more suited to those investors who are prepared to accept a slightly higher risk profile.
“Asia is becoming a strategic destination for the real-estate investor and we want to support our group and third party client efforts in diversification and creation of value,” he
said.
In a separate interview, Mr. Pierre Vaquier, Chief Executive Officer, AXA Real Estate, who was in Seoul to meet with potential investor partners noted that while Korea is an important market for the company, it is not an immediate priority.
“ We want to expand our investments in Asia, are considering Korea for medium term exposure. Although a very mature market, it is still dominated by domestic players. It is only recently that the foreign investors have started coming it. We look at it as a key investment market in the long term,” he said.
When the company invests in a new territory, they consider it very important to have local expertise. While in Europe they have setup their own local teams, in Asia, the strategy is to have both a local team and a local partner. For example the company has teamed up with a local partner in China.
As for the emerging BRICs, he noted that they have a huge potential, and each country has its own advantages, although Russia does not have the characteristics of other emerging markets and is energy driven. The outlook for China, India and Brazil is very positive.
“The only country where we have no strategy is South Africa, as it is a market of its own, and we have to be very cautious.”
Mr. Vaquier said the main challenges the company faces in new markets is to understand local characteristics and have a secure environment to do business.
“We need to be careful with volatility of markets, and have to be very careful with the business cycles. Getting a good local partner is important as also investing in real estate asset classes which are backed by growth model.” support case
With regard to the European economy which has been hit by the debt crisis in Ireland, Greece and Portugal, he said AXA is “cautiously positive” that the recovery will take place soon.
“ The worst is behind us, and many private companies are expanding again. The worries on the debt are not going to disappear overnight, and will take a few years. But it will definitely recover.”
While the citizens of many of the countries have been protesting the austerity measures that have been implemented in these countries, he noted that the combination of higher taxes and slower consumption is painful, but there are not much choices left.
“The governments have to take into account all factors. The people are critical not of the measures, but how it is being implemented,” he said.
Speaking on the impact of the Japanese tsunami on the company’s business, he noted that although it is too early to say, it will likely not have much of an impact. The disaster has shown that earthquake regulations have been effective in limiting the damage. While the economy may be effected in the short term, the reconstruction efforts will help the economy grow again.
Since AXA is involved in life insurance and not in property/causality insurance, there will be no impact on the parent company, he said.

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Interview: Mr. Lee Hyun-dong, Commissioner, National Tax Service

Last year, Korea marked its highest level in foreign direct investments since the financial crisis, which is close to $12.8 billion, despite of instability in the financial market and the geopolitical security crisis. Korea also achieved the growth rate of 6.1% last year thanks to foreign investment, even amid a global trend of a decline in foreign direct investments.
Though the number of foreign and foreign invested companies in the Korean market takes up only 2%, their contributions to Korean tax revenue is significant, reaching up to 18% of the national revenue.
At the pan-governmental level, Korea is making every effort to attract foreign investment. Starting this year, the National Tax Service started issuing statements in English to help non-Korean speakers. Taxpayers are also now able to choose an English-language option for statements from as far back as the 2006 fiscal year. Previously, taxpayers paid fees to translate and notarize financial statements, which were only available in Korean.
Beginning June 24, the agency will also issue statements via its Web site (www.hometax.go.kr). The tax agency will open an English-language Web page to improve services for foreigners and foreign companies seeking to verify documents. These are just some of the proactive steps that the agency is taking under Commissioner Lee Hyun-dong. In an interview, he explains more:

In your view, what is currently the most important challenges and objectives of National Tax Service?
The reality faced by National Tax Service in 2011 is characterized by challenges of weakened tax base, more aggressive tax evasions and opportunities such as strengthened trust for tax administration, more transparent society and international cooperation among tax authorities.
Under these circumstances, National Tax Service's objective for this year is "fair and trustworthy tax administration respecting our clients" so that it can be one of the world's best tax authorities.
To achieve this goal, we will first make efforts to create a social environment in which honest tax payers are truly respected. We'll lend support so that sincere small businesses won't have to worry about how to pay tax. We'll also minimize the amount of notices reminding them of reporting income so that everyone can pay tax in an autonomous manner. Moreover, those who continue to pay tax honestly will be exempt from tax investigations or benefit from simplified investigations. To help Korean businesses operating overseas, we'll strategically consider the preliminary approval of previous prices and a mutual agreement between Korea and the country where the Korean business is run. If necessary, we'll strengthen the bilateral cooperative network through, for example, the national tax service commissioners' meetings.
Second, we'll strengthen our system preventing tax evasion by further encouraging citizens to pay tax honestly. Doing this will require us to clearly identify tax evasion cases and to select those subject to tax investigation in a rational way. Moreover, to eradicate new types of tax evasion based on financial derivatives or e-commerce, we'll develop and support investigation techniques at the Forensic & Anti Tax-evasion Center (FAC) which was established this February. In addition, we'll continue to ensure transparent transactions by firmly establishing the system of e-tax invoice and by strengthening the monitoring of business types eligible for issuing cash receipts.
Third, we'll continue our efforts to find hidden sources of taxation. A case in point is prevention of offshore tax evasion. Last year, we worked hard on developing the infrastructure designed to prevent offshore tax evasion. Base on this infrastructure, we'll focus on blocking such evasion. Meanwhile, we'll try to strengthen the tax base by cracking down on those who don't respect the basic tax order. Examples of such cases that are to be eradicated would be politicians who violate law to evade tax, those who avoid paying overdue taxes, those who carry out transactions without issuing tax invoices and those who don't register their business.
Are there any measures in place designed to help foreign investors pay tax easily in Korea?
What is the most necessary for a business operating overseas would be a transparent and predictable tax code and a strong taxation system.
To enhance the transparency and predictability of taxation, we make efforts to improve our current Q & A system to give accurate answers more promptly. Moreover, we introduced a system meant to help interpretation of the tax law in 2008. This system allows tax payers to ask more specific questions about their everyday tax paying practices and to receive applicable answers from National Tax Service.
Furthermore, National Tax Service reached "gentleman's agreements" with businesses. This agreement allows businesses to communicate their tax-related issues to the Service whose special team answers their questions in real time. Up until last year, we conducted a pilot project to test this system on 15 businesses and this year, the Service signed this agreement with 70 businesses. The companies that sincerely respect the clauses of the agreement will be exempt from the regular tax investigation.
This agreement enables the businesses to predict their tax amount before reporting their revenue and it also removes unnecessary uncertainties regarding taxation. The agreement is thus expected to contribute to enhancing the transparency of business management, a factor that is particularly emphasized these days.
Second, there are many easy ways to report income and pay tax. Our Hometax-service, which allows tax payers to report their income and pay tax without visiting the tax office, would be one of the best services in the world. More than 96% of the corporate tax is reported and payed through this service. In addition to reporting and paying tax, other major affairs such as business registration may also be done online thanks to the "Paperless-e" office whose functions have been expanded.
National Tax Service has recently revealed its willingness to eradicate offshore tax evasion. Could you specify?
Offshore tax evasion triggers unfair taxation in that such tax payers mostly possess a great amount of income and property and in that they give unnecessary tax burdens to honest tax payers. Moreover, illegal capital flight preceding such evasion also chips away domestic consumption and investment resources, damaging the domestic economy. That is why such evasion needs to be eradicated.
In an attempt to alleviate their financial deficit and to secure tax revenues in the post-recession era, countries around the world engage in a war to fight against such evasion mainly by creating new domestic systems and by allocating more budget. International cooperation is also strengthened in this matter in the framework of the OECD or G20. Meanwhile, countries traditionally known as tax havens have recently agreed to ensure their financial transparency, contributing to the creation of an international environment favorable for the eradication of offshore tax evasion.
Since last year, National Tax Service has also concentrated on eradicating such evasion. This endeavor has drawn attention not only form the Korean media and National Assembly but also from all Korean citizens who have actively supported us.
Last year, we focused on establishing a system designed to respond to offshore tax evasion. To be more specific, we adopted a system which requires those who have more than one billion won in the account of an overseas financial institution to report the transactions of the account. We also created an organization specializing in dealing with such evasion and secured a budget to eradicate such practices. These are our tangible results.
This year, we'll redouble our efforts to secure a tax revenue of at least one trillion won in the tax investigation on offshore tax evasion. To do so, we have increased the number of those who participate in this investigation and only highly competent people can be the members of our investigation team. In addition, our agents will be dispatched to the cities where tax evasion is the most frequent or to those that are included in the itinerary in order to ensure onsite data collection. Moreover, we'll strengthen the simultaneous tax investigation with other countries including the United States, while making the best use of the simultaneous information exchange agreements signed with tax havens, in an attempt to find domestic property that is hidden overseas.
Our biggest priority for now would be the successful implementation of the overseas account report system which was launched this year.
Foreigners who work for foreign companies in Korea live in the country according to the domestic tax code but if they lived in Korea for less than five years over the last ten years, they don't have to report their income.
Many SMEs are worried about frequent tax investigations. Do you have any solution to ease their concerns regarding such investigations?
In Korea, the percentage of SMEs that undergo tax investigation is lower than that of large businesses. As of 2009, only 0.83% of Korean SMEs were subject to such investigation. It is thus difficult to say that Korean SMEs undergo frequent tax investigation.
Nevertheless, National Tax Service is making administrative efforts to minimize SMEs' burden when they become subject to such investigation.
First and foremost, if a relatively honest SME has to undergo an investigation, the investigation period becomes shorter and simpler. Such "simplified tax investigation" is focused on management consulting in the area of accounting and tax, rather than on taxation itself.
As for very small businesses which don't have its own office or whose office is too small, their representatives may also visit the investigation authorities to undergo investigation. This "out-of-office investigation system" enables such businesses to save their taxation-related expenses.
Furthermore, to remove the uncertainties faced by tax payers before undergoing such investigation, we provide them with an orientation course before the investigation and explain the process during the investigation period. At the end of the investigation, a special day is in place to answer the tax payer's questions.
Lastly, if an investigation infringes on the tax payer's rights, he or she can ask a "tax payer protection agent" for help. Through this system, we're doing our best to make sure that each tax payer's rights are protected.
Although it is true that the measures mentioned above greatly help small businesses alleviate their economic or psychological burdens, what is more important would be the mutual trust between National Tax Service and tax payers. Such trust can be formed when both respect the mutually agreed-upon rules. To win trust from Korean citizens, National Tax Service will conduct tax investigation based on the laws and rules and it will do its best to prevent any misunderstanding that may arise from its investigation.

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Interview: Joyce Lo, Associate Director – Head of Corporate & Investor Strategy, Sniper Capital

Sniper Capital was established in 2004 to capitalize on the many property development and investment opportunities offered by Macau’s burgeoning economy. Since then its business has grown considerably.
Today the company employs 25 dedicated professionals working on a portfolio that has expanded beyond Macau's city limits to include the Western Pearl River Region of Southern China.
Sniper Capital utlises a broad array of in-house capabilities to efficiently execute every aspect of the investment and development cycle. Its dedicated focus on research and acquisitions, project development, asset management, fund administration, capital raising and investor communications allows the company to act both independently and swiftly to maximise returns on each project.Joyce Lo, Associate Director – Head of Corporate & Investor Strategy, Sniper Capital, spoke to us about the company’s plans as well as prospects for the Macau market.

Could you give us some background of your company and your major projects?
Sniper Capital Limited is an independent property investment manager specialising in property investment and development in niche and undervalued markets. Today, the firm manages two funds – the private closed-end South China Sniper Fund (SCSF) and London Stock Exchange Main Board listed Macau Property Opportunities Fund (MPO) – with combined assets of $350 million.
MPO is an opportunistic investment fund that focuses on delivering long term returns from the investment and development of high quality properties in Macau and China’s Pearl River Delta. The portfolio properties are generally of medium to larger sizes. SCSF acquires niche, small sized properties in districts which have yet to reach their full potential, and creates value through the amalgamation, redevelopment and repositioning of these properties into retail and food and beverage outlets.
Since November 2010, Sniper Capital has begun officially marketing the Macau Sniper Fund, a $100 million private fund that adopts a strategy similar to SCSF. With over seven years of experience operating in the Macau and Southern China property markets, Sniper Capital has established a strong track record in sourcing, planning and redevelopment, including working with sensitive heritage sites and old buildings. Recently, Sniper Capital has also started leveraging its sourcing and acquisitions expertise and extensive investor reach to build an investment advisory business.
Sniper Capital’s in-house expertise covers every aspect of the investment and development cycle, including research, site acquisition, project development, asset management, investor relations and finance.
Within MPO, major portfolio residential projects include The Waterside (luxury residential leasing) – Tower Six of One Central Residences, the most prestigious residential project in Macau – and The Fountainside (low density residential development) – 42 apartments catering to middle- and upper-income locals. Other key assets include a retail development in Senado Square– located in the heart of Macau’s popular tourist and shopping district – and APAC Logistics Centre (warehousing and logistics) – close to the recently-opened Guangzhou-Zhuhai rail network and the Hong Kong-Zhuhai-Macau Bridge, currently under construction.
We have also recently entered into an agreement with a local Macau developer to sell our Rua do Laboratório project (entry level residential) for $41 million, representing a net return on investment of 84%, upon the sale completion expected in April 2011.
On the private funds side, the Group is involved in a number of non-gaming destination creation projects through the conversion of older, Portuguese-colonial style buildings into retail outlets that can be leased to attractive bars, restaurants, and niche shopping designed for the enjoyment of both locals and tourists. These new landmarks are rapidly becoming places of choice for people who want to experience the vibrancy of the new Macau as well as the rich 500-year history that the territory’s historic areas have to offer. These unique projects, which have been conceived in conjunction with Macau's dedicated Heritage Department, are in complete contrast to the cutting edge designs of the nearby casino hotel resort projects.

Why are you focusing on the Macau market and what are the investment opportunities?
The firm’s principals, Tom Ashworth and Martin Tacon were attracted to Macau’s potential after its 1999 handover from Portugal to China, and the local administration’s decision soon after to break the 40-year gaming monopoly held by Stanley Ho and allow foreign casino groups to open resorts. Once a sleepy fishing village, Macau is today by far the world’s largest gaming market, generating $25 billion in casino revenues and welcoming 25 million visitors a year.
We continue to believe that Macau remains in the early stages of a period of sustained economic growth. A new round of mega resort expansion in Cotai, coupled with ambitious infrastructure projects such as the Hong Kong-Zhuhai-Macau Bridge, PRD inter-city rail network and Macau Light Rail Transit system all point to an increasingly dynamic and rapidly growing economy. Macau remains well positioned to benefit from the opportunities that will arise as a result.
Non gaming Retail and Food & Beverage
Non-gaming currently accounts for less than 20% of Macau visitors’ expenditure. The heavy focus on Macau casino projects has left Macau with a significantly underdeveloped non-gaming entertainment and leisure market. Underscored by the government’s commitment to diversify the economy, Sniper Capital expects the proportion of non-gaming revenues to increase exponentially in the coming years. Looking at the evolution of Las Vegas – where half of visitor expenditure today is allocated to non-gaming activities – we believe there is a great deal of potential upside by focusing on non-gaming real estate in Macau.
Residential
The entry of the international casino and resorts has lifted the benchmark for an improved standard of living in Macau. There is an increasing demand for high quality housing in prime locations from both expatriates and the more affluent locals looking to upgrade. Unemployment in Macau has dropped to a historical low of 2.7% while median monthly incomes are on the rise. There are also favourable government initiatives that spur demand for affordable accommodation from first time local buyers. Macau’s residential property market – which rebounded strongly post the financial crisis – is still exhibiting good value. According to Jones Lang LaSalle, capital values for the high end residential market rose by 9.6% in 2010. The modest upturn in Macau’s residential property market, compared to Hong Kong and other regional markets, is expected to continue benefitting from powerful local drivers and high levels of affordability.
Logistics
The construction of the $11 billion Hong Kong-Zhuhai-Macau Bridge will create a critical transportation link between western and eastern Pearl River Delta (PRD). When completed in 2016, travelling time between Hong Kong and Zhuhai will be reduced to a mere 30 minutes. To capitalise on increasing opportunities arising from the rapid economic integration of the PRD region, MPO is developing APAC Logistics Centre – a state of the art warehousing and logistics facility in Zhuhai.

What are the major differences between Macau and other Asian countries?
Macau, the only gaming jurisdiction in China, has since 2006 replaced Las Vegas as the largest gaming market in the world by gaming revenues, and are now almost double that of Nevada and New Jersey combined. Figures show that one of Macau’s casino groups – SJM – has revenues that exceed those of the entire Las Vegas strip.
CLSA expects Macau’s nearest rival, Singapore, to hit gaming revenues of $6.5 billion this year, on par with that of Las Vegas, but behind Macau at $30 billion. By 2012, Singapore is expected to rake in $8.1 billion, ahead of Las Vegas at $6.8 billion but still a fraction of Macau’s forecasted $34.7 billion.
Underpinned by strong fundamentals, Macau is set to be Asia’s fastest growing economy, at an estimated growth rate of 30% in 2010. With less than 30 square kilometre of land, Macau has the highest population density at 18,835 per sq km as well as one of the highest GDP per capita of $48,000 in Asia.
Aside from outstanding economic fundamentals, Macau, the oldest European colony in East Asia and the most recently relinquished colony in the world, boasts almost 500 years of rich Portuguese heritage. The government has established an official heritage department to preserve the unique blend of Chinese & European in architecture. The fusion of these cultures is also prevalent in the cuisine and the population.
In addition, Macau is the only place in China that has freehold land, although there is not necessarily a price differential between leasehold and freehold.

What differentiates Sniper Capital from other Boutique houses?
Our independence and minimal bureaucracy make us nimble and innovative. Our culture is highly entrepreneurial which encourages lateral thinking and attracts self-driven personnel.
As our name suggests, we are highly focused on certain markets and segments. We are attracted to “below the radar” properties that are often overlooked by larger developers. Moreover, we have the technical knowledge and capability in working with heritage sites. At this point, we are the only major foreign fund manager that is established and continue to grow in Macau. We believe in having local presence with our team developing a vast network of proven and established contacts in the markets in which we are operating. This fuels our ability to source, acquire and manage quality investment opportunities with strong value propositions.
In addition, we possess excellent in-house resources to across the entire investment cycle, delivering value enhancement through planning, development, asset management and eventually through a successful exit.

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Interview: Mr. Lee Soo-won, Commissioner, Korea Intellectual Property Office

The Korean Intellectual Property Office (KIPO) has a wide range of responsibility areas, ranging from patent and trademark examinations, to administering the IP Tribunal (the first stage of invalidation actions in Korea), and launching a Special Judicial Police force last year specializing in trademark infringement enforcement actions.
Mr. Lee Soo-won has served as Commissioner of KIPO since his appointment in May 2010. Prior to his current position, he worked in the Office of the President as Secretary to the President for Economic Crisis Management.
As Commissioner of KIPO, Mr. Lee is in charge of intellectual property (IP) policies. His top priorities are to enhance the quality of patent examinations; to maximize R&D efficiency through patent strategy and open innovation; and to facilitate cooperative work-sharing with other leading IP offices.He is also endeavoring to initiate various programs of international cooperation to meet the desperate needs of the marginalized and impoverished, especially those who struggle for the basic necessities of survival.
Commissioner Lee, who brings a large amount of senior policymaking experience to the role, outlines the current policy in a number of key areas in an exclusive interview.

In recent years, KIPO has established itself firmly in the top rank of international patent offices. Could you give an indication of your priority areas for international cooperation, in particular in regards to IP5 initiatives and also KIPO's role in capacity building in developing countries?
KIPO is engaged in extensive cooperation with the other major intellectual property (IP) offices that make up the IP5 offices, namely the European Patent Office (EPO), the Japan Patent Office (JPO), the State Intellectual Property Office of the People's Republic of China (SIPO), and the United States Patent and Trademark Office (USPTO). The aim of IP5 cooperation is to raise the efficiency of patent examinations and administration through work-sharing among the five leading offices. This type of cooperation helps improve the timeliness and quality of patent examination services.
The IP5 offices are collaborating on ten foundation projects. The projects involve three working groups on patent classification, IT supported business processes, and patent examination policy. KIPO leads two of the foundation projects: the Common Training Policy Project and the Mutual Machine Translation Project. The fourth IP5 heads meeting will be held in Japan in April 2011. It will be an opportunity to check the progress of the foundation projects and to discuss plans for further cooperation in the future.
KIPO is also actively engaged in bilateral cooperation. We had more than 30 bilateral meetings with other IP offices in 2010 and broadened our exchanges with European countries. In January we had a heads meeting and discussed bilateral activities with the EPO. And in February we had another heads meeting with the Intellectual Property Office of the United Kingdom (UKIPO). At the latter meeting we discussed an ongoing mutual benchmarking exercise to enhance examination quality and productivity. I believe the project with the UKIPO is indicative of our world-class examination capabilities.
In March 2010, we signed a memorandum of understanding with the Italian Patent and Trademark Office on IP protection. And in July we began implementing a Patent Prosecution Highway (PPH) with the German Patent and Trade Mark Office. This project enables each office to conduct accelerated examinations by utilizing the examination results of the other office. KIPO is also endeavoring to strengthen cooperative ties with the Office for Harmonization in the Internal Market (OHIM). These efforts are expected to come to fruition in due course.
Once a least developed country, Korea now has the fourth largest number of patent applications. This transformation has motivated us to help developing and least developed countries (LDCs) achieve economic progress through the utilization of IP. In 2004, we established the Korea Funds-in-Trust at the World Intellectual Property Organization (WIPO) to help enhance the IP capabilities and raise IP awareness in developing countries and LDCs. To date, 69 countries have benefited from the 45 projects under this scheme.
Recently we embarked on a project to provide appropriate technology to least developed countries. We also assist developing countries to create local brands so that they can sell their quality products at adequate prices. Last year, for example, we disseminated appropriate technology to Chad to help locals produce sugarcane charcoal and dried mangoes. And we are now planning to distribute sand brick technology to Nepal. Last year we also assisted in the branding of Chadian dried mangoes and, in 2009 we helped the YMCA with the branding of East Timorese coffee that was imported and sold under the fair trade movement. This year we will collaborate with APEC on the One Village One Brand project.
One of the areas that receive a lot of attention is efforts to maintain patent quality, especially in the face of soaring global patent applications and subsequent increases in examiner workloads. Could you outline KIPO's efforts to maintain examination quality whilst keeping on top of rising application numbers?
The soaring number of patent applications means that IP offices around the world face a common challenge in terms of managing and maintaining the quality of patent examinations. As with domestic applications, KIPO is now receiving an ever-increasing number of requests from foreign enterprises for international searches under the Patent Cooperation Treaty (PCT). This trend has led to huge increases in examiner workloads.
To deal with the increasing number of applications, KIPO has developed and implemented various policies on the provision of high-quality examination services. Firstly, we have recruited additional highly qualified examiners. We have also improved our training courses on new technologies so that examiners can keep abreast of rapidly changing technologies. Moreover, we ensure the quality of our examinations by assigning skilled experts, such as directors of examination divisions and heads of examination sections, to guide and supervise the entire examination process.
The Office of the Examination Quality Assurance Officer is responsible for the overall management of the examination quality. The staff of that office evaluate and manage the quality of patent, trademark, and design examinations. They evaluate samples of examiners' work results and undertake relevant planning, diagnosis, and analysis in order to improve the overall quality of our examinations. The evaluation results help examiners avoid repeating errors and rewards are given to divisions and examiners with excellent evaluation results. The results are also included in the overall performance evaluation of each examiner.
A special team of examiners is also dedicated to ensuring the quality of PCT applications.
Trials at the Intellectual Property Tribunal is playing an important role in the resolution of IP disputes. Could you briefly explain what efforts are being made by the Intellectual Property Tribunal to improve the quality of the trials and to increase the efficiency of the trial procedures?
The Intellectual Property Tribunal, which is one of the organizations affiliated with KIPO, continually strives to ensure the quality of trials and to improve the efficiency of trial procedures. To raise the trial quality, the tribunal analyzes the grounds for the revocation of trial decisions and includes the outcome in the evaluation of trial examiners. It also provides training courses on the cases involving revocation of the trial decisions for trial examiners. Each quarter, the tribunal rewards trial examiners who have made exemplary trial decisions.
The tribunal has endeavored to have more oral proceedings and to improve the quality of those proceedings. In inter parte cases where parties are sharply opposed to each other, the tribunal conducts oral proceedings to clarify the issues and to ensure the accuracy of the relevant facts. We have also increased the number of trial courts from one to five, recruited four additional court reporters, and equipped all the trial courts with a digital deposition system. Last year the tribunal conducted 647 oral proceedings, and it expects to keep this number at an annual average of about 600.
The tribunal has produced a guide manual to standardize written trial decisions, which is accessible on our electronic trial system. The manual is expected to help trial examiners minimize the preparation time for writing trial decisions.
One major recent development in KIPO's activities has been the founding of the Special Judicial Police force, which began operations in September 2010. Can you give an overview of the role of this department, and are there any ways that the EUCCK IP Centre and its members can support KIPO in its valuable enforcement actions?
Counterfeit goods should be eradicated. They discourage investments, hinder the creation of new inventions, and have a bad effect on the economy. Prior to September 2010, there was no organization in Korea exclusively responsible for investigating and cracking down on trademark-related offenses. KIPO's crackdown activities were limited to issuing corrective warnings or taking legal action against counterfeiters.
The introduction of the Special Judicial Police Authority at KIPO in September 2010 means we are no longer a paper tiger. We can clamp down on the circulation of counterfeit goods in a more systematic and efficient manner. The new authority is the only investigatory body in Korea dedicated solely to trademark-related offenses. It endeavors to eradicate counterfeit goods through its own crackdowns and through cooperative works with other related organizations. The authority currently has offices in Seoul, Daejeon, and Busan. It has a total staff of 19.
The efforts of the Special Judicial Police Authority are focused on the online and off-line circulation of counterfeit goods. The authority has strengthened the apprehension of repeat offenders and intensified crackdowns at counterfeit hotspots. It has also enhanced cooperative ties and conducted joint crackdowns with relevant organizations, such as the Korea Customs Service, the Prosecution Service, the National Police Agency, and local governments.
The introduction of the Special Judicial Police Authority led to a tenfold increase in the number of confiscated counterfeit goods last year. Before the authority was established in September last year, the number of confiscated goods from January to August was only 2,860. By the end of the year, however, the number had soared to 28,629. This is actually a twenty times increase considering the authority had operated for only four months until then.
To more effectively crack down on counterfeit goods, we need further cooperation from trademark holders and other relevant groups. It would be helpful, for instance, if the IP Center of the EUCCK could provide the Special Judicial Police Authority with detailed information on any online and off-line distribution of counterfeit goods and offer the staff at the authority a training course on how to distinguish genuine and counterfeit goods.
Many Korean firms are now focusing on R&D investment as a route to long-term growth. In addition, Korean brands and design are becoming increasingly popular throughout Asia and the world. What efforts is KIPO making to promote innovation and creativity, in particular those of SME's?
Nowadays Korea is blessed with a world-class manufacturing industry in a variety of fields. The government and private enterprises have invested heavily in R&D to ensure this trend continues for a long time. In 2009, R&D investments in Korea constituted 3.56% of our GDP. That's the fourth highest proportion in the world.
KIPO has contributed to this state of affairs by helping enterprises protect their R&D outcomes as IP. As a result, Korean products have become increasingly popular throughout Asia and the rest of the world.
Small and medium-sized enterprises in Korea often need help in the areas of innovation and IP creation. To meet this need, our office runs 31 local IP centers to encourage them to create their own IP. The centers offer consultations on patent management as well as on brand and design strategies.

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