Korea Achieves '20 Billion USD in Foreign Direct Investment for 6 Consecutive Years'

Ministry of Industry 2020 FDI Trends... $5.2 Billion Investment Attraction in Q3

Eric Hoffman, Chairman of the Foreign Investor Advisory Council, delivering a greeting at the 50th meeting of the Foreign Investor Advisory Council held in August 2019 at the Seoul Global Center International Conference Hall in Jongno-gu, Seoul. Photo by Mun Honam munonam@

[Asia Economy Reporter Moon Chaeseok] South Korea's foreign direct investment (FDI) inflow exceeded 20 billion dollars last year. This marks the sixth consecutive year of surpassing this threshold. In the fourth quarter alone, 7.85 billion dollars were attracted.

The Ministry of Trade, Industry and Energy announced the '2020 FDI Trends' report on the 12th, containing these details.

Last year's FDI attraction is significant as it maintained a level above 20 billion dollars despite the COVID-19 pandemic. While the reported amount in the first half of the year was only 7.66 billion dollars, 13.09 billion dollars were attracted in the second half. Notably, in the third quarter, despite the second pandemic wave, 5.23 billion dollars were drawn in, marking the highest quarterly performance ever recorded.

FDI in the fourth quarter of last year was 7.859 billion dollars on a reported basis, down 20.2% compared to the same period the previous year. On an arrival basis, it decreased by 47.7% to 2.86 billion dollars.

An official from the Ministry explained, "As COVID-19 spread intensified, FDI in the first half sharply declined, but through K-quarantine as well as online investor relations (IR) such as video consultations and webinars, the decline was significantly reduced in the second half."

Last year, investments expanded in new industries related to the Fourth Industrial Revolution, advanced materials, parts and equipment, and the Green New Deal sectors.

On a reported basis, manufacturing stood at 5.97 billion dollars (a 27.4% decrease from the previous year), but the electrical and electronics sector surged from 1.09 billion dollars to 1.65 billion dollars.

The service sector recorded 14.35 billion dollars, a 2.7% decrease compared to the same period last year. Due to COVID-19, retail and wholesale (distribution) performance shrank from 3.47 billion dollars to 1.2 billion dollars.

Greenfield investment, which involves directly establishing production facilities or corporations, amounted to 14.51 billion dollars on a reported basis, down 8.8% from the previous year. Among this, the United States' Greenfield investment was 5.09 billion dollars, a 24.2% decrease compared to the previous year.

Mergers and acquisitions (M&A)-type FDI decreased by 16% to 6.23 billion dollars.

The Ministry expects FDI to show signs of recovery next year. According to the United Nations Conference on Trade and Development (UNCTAD), global FDI is expected to decline an additional 5 to 10% this year.

UNCTAD forecasted that due to prolonged economic recession caused by the resurgence of COVID-19, the inauguration of the new U.S. administration, and the realization of Brexit (the United Kingdom's withdrawal from the EU), uncertainty in the global economy will continue to suppress investor sentiment for the time being.

An official from the Ministry said, "Since both positive and negative factors exist domestically and internationally, such as COVID-19 and global economic uncertainties, attracting domestic FDI this year is expected to be challenging."

He added, "This year, the Ministry will actively discover and attract investments that contribute to the advancement of our industries, such as new industries, advanced materials, parts and equipment, research and development (R&D), and the Green New Deal, striving for a 'FDI plus transition.'"

This content was produced with the assistance of AI translation services.