Biggest amount of FDI (Foreign Direct Investment) was made in last year. Although facility investments made by South Korean businesses were not significant, FDI was maintained relatively solid. As fundamental of South Korea＇s major industries such as semiconductor and display was maintained solidly, many FDIs were made in order to be included in supply network of these industries. In spite of uncertainty such as possibility of protectionism in 2017, South Korean Government is planning to concentrate political capabilities in order to attract more than $20 billion of FDI for 3 years in a row.
Ministry of Trade, Industry and Energy (MOTIE) made an announcement on the 3rd that reported amount of FDI in 2016 was the biggest ever in South Korean history at $21.3 billion and South Korea was able to attract more than $20 billion of FDI for 2 years in a row.
MOTIE announced that there was a positive trend in FDI due to increase in service industry investments and green field investments.
South Korea recorded its biggest service industry investments, which have increase continuously since 2011, in last year $15.51 billion which is 5.3% increase from 2015. South Korea also recorded $15.22 billion in green field investments, which are based on businesses securing their own lands and constructing facilities and business places, and this helped overall performance.
Above all, it is interesting that FDI is growing steadily even though facility investments made by South Korean businesses are not significant. Facility investments in 2016 decreased by 3.8% compared to 2015. On the other hand, FDI in manufacturing industry in 2016 was $5.13 billion which is 12.4% increase compared to 2015 and accumulated FDI in manufacturing industry since 1962 surpassed $100 billion.
＂Recent increase in FDI is a circumstantial evidence that South Korea is having appeals as a source of investments from an aspect of introduction of domestic markets, exports utilizing FTA platform, and utilization of high-caliber talents.” said Department Head Chae Hee-bong of MOTIE’s Trade Investment Department. “We are going to strengthen our political support so that we can once again attract more than $20 billion of FDI in this year.”
Per country, South Korea received $7.4 billion of investments from EU which is the biggest ever in South Korea history and 3 times the investments from EU in 2015. Investments in manufacturing industry and service industry increased greatly in spite oef Brexit (withdrawal of England from EU) effect. Bio field and medical field and chemical engineering led positive trend for manufacturing industries while finance and insurance, business service, community development, and construction led positive trend for service industries.
South Korea attracted $2.05 billion of investments from China which is 3.6% increase compared to 2015. Investments from China had increased for 3 years in a row and surpassed $2 billion for the first time and accumulated investments also surpassed $10 billion.
On the other hand, investments from the U.S. and Japan were relatively insignificant. South Korea attracted $3.88 billion from the U.S. which is lower than investments in 2015 ($5.48 billion) and attracted $1.25 billion from Japan.
However introduced amount, which indicates money that is introduced to South Korea, in 2016 was $9.76 billion and this value is decreased by 40.9% compared to previous year.
＂Along with reported amount, sudden decrease in M&A-type investments are the major reasons.” said Department Head Chae. “However it is meaningful that green field investments, which are more impact from an aspect of creation of employments, formation of value chains with global businesses, and internal transfer of new technologies, increased.”
Staff Reporter Yang, Jongseok | email@example.com
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