Seoul City Records Record High Foreign Direct Investment Despite COVID-19... Exceeds 10 Billion USD for 2 Consecutive Years

Among the National FDI of $20.7 Billion, Seoul Accounts for 49%... Driving Foreign Investment as a Global Investment Hub City
Up to 50 Million KRW Employment Subsidy for Promising Foreign-Invested Startups

[Asia Economy Reporter Lim Cheol-young] Seoul's foreign direct investment (FDI) has exceeded 10 billion dollars for two consecutive years, setting a record high. Despite the global investment sentiment shrinking due to the spread of COVID-19, foreign direct investment continues its strong momentum.

On the 10th, Seoul City announced that last year's reported FDI was finally tallied at 10.2 billion dollars. Seoul's FDI first surpassed 10 billion dollars in 2019 with 10.1 billion dollars and has shown steady growth for four consecutive years since 2017.

In particular, while nationwide FDI recorded 20.74 billion dollars, down 11% from the previous year, Seoul's FDI accounted for 49% of the total. Seoul is thus leading Korea's foreign capital attraction as a global investment hub city. The main factors for the increase in Seoul's FDI include the remarkable growth in the service sector, with financial and insurance investments up 132% year-on-year, a 99% increase in investments from the Americas, and a 40% rise in investments in new industries.

Last year's FDI in the service sector, Seoul's main investment attraction industry, increased by 17% year-on-year to 9.4 billion dollars, of which financial and insurance accounted for about 60%, recording 5.6 billion dollars. Service sector FDI is showing an upward trend in investments in new industries such as finance and insurance, information and communication, and research and development, following the full-scale industrial restructuring brought about by the Fourth Industrial Revolution.

The type of investment has also changed. 'Mergers and Acquisitions (M&A)-type' investments sharply decreased by 82% compared to 2019, totaling 610 million dollars, while 'Greenfield-type' investments increased by 34% to 8.5 billion dollars. Whereas traditional Greenfield investments involved directly purchasing land and establishing new business sites or factories, recent Greenfield investments have shifted to forming global funds or directly investing in companies through overseas venture capital (VC) or financial firms.

In 2019, financial and insurance investments within Greenfield-type investments amounted to 1.91 billion dollars, but last year they surged by 135% to 4.49 billion dollars, showing a significant expansion in investment. Notably, investments in Seoul's major promising startups have expanded, driving growth in attracting overseas investment.

This year, Seoul plans to continue its rapid investment attraction activities to sustain the upward trend of foreign direct investment (FDI) by expanding FDI and enabling Seoul's promising startups to scale up through various measures such as ▲employment subsidies up to 50 million won ▲support for participation in overseas exhibitions for promising companies.

First, to stabilize employment at companies that have attracted overseas investment, Seoul City created jobs by newly hiring more than five people in new industries such as IT and bio last year and will provide employment subsidies of up to 50 million won per company to those wishing to maintain employment going forward. Additionally, the city aims to expand the base of foreign investment and accelerate its status as a 'global investment hub city.' Through this, Seoul plans to support the global expansion of promising startups and broaden connections with various overseas investors to diversify and globalize Seoul's startup ecosystem.

Above all, Seoul will actively support promising startups in new industries such as research and development and information and communication, which promote Seoul's innovative growth, to participate in overseas exhibitions and attract investment. In the first half of this year, Seoul will select 20 promising startups to introduce to overseas investors at 'MWC 2021,' the world's largest mobile telecommunications exhibition known as the mobile Olympics, and 'BIO USA,' the world's largest bio and medical exhibition.

Kim Ui-seung, Director of Seoul City's Economic Policy Office, said, "Despite difficult economic conditions, it is very encouraging that FDI has been attracted at an all-time high scale and investment in our promising startups has expanded, accelerating their entry into overseas markets. In 2021, we will make multifaceted efforts to support the growth of promising startups, expand the base of foreign investment, and become a global investment hub city."

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