Last Year Foreign Investment Hits $29.5 Billion 'Record High'... 42% Increase YoY

COVID-19 Prolongation and Supply Chain Crisis: Rebound After 2 Years

[Sejong=Asia Economy Reporter Kwon Haeyoung] Last year, foreign direct investment (FDI) in Korea nearly reached $30 billion, increasing by more than 42% compared to the previous year, achieving the highest record ever. Despite the prolonged COVID-19 pandemic and global supply chain crisis, foreign investment expanded evenly across supply chains, the K-New Deal, and new industries, contributing to economic recovery.

The Ministry of Trade, Industry and Energy announced on the 10th that FDI in 2021 amounted to $29.51 billion based on reported figures, a 42.3% increase from the previous year. The previous highest record was $26.9 billion in 2018, which this figure surpassed.

Based on actual investment arrivals, it recorded $18.03 billion, a 57.5% increase.

FDI had been declining for two consecutive years since 2019 but rebounded last year.

By industry, the reported amount in the service sector was $23.57 billion, up 64.2% from the previous year. Investments increased significantly in sectors such as information and communication (317.2%), wholesale and retail distribution (139.1%), and business support and leasing (833.0%).

On the other hand, manufacturing recorded $5 billion, down 16.2% from the previous year. Typically, manufacturing tends to recover more slowly than services due to accompanying facility investments.

By country, the reported amounts were $5.26 billion from the United States, $12.8 billion from the European Union (EU), $7.54 billion from Greater China, and $1.21 billion from Japan. While the U.S. decreased by 0.9% compared to a year earlier, the EU, Greater China, and Japan increased by 169%, 38.1%, and 52.8%, respectively.

By type, greenfield investments (building factories or business sites) increased by 83.2% to $11.42 billion, and mergers and acquisitions (M&A) increased by 24.7% to $18.09 billion.

Looking at last year's FDI, investments were evenly distributed across supply chains, digital and green sectors under the K-New Deal, and new industries.

In the supply chain sector, the U.S. made a $210 million investment to expand semiconductor component (IC) businesses, and Germany invested $300 million in bio raw materials.

In the digital sector, a domestic lodging and travel platform service company attracted $1.46 billion in global fund investment from Singapore. In the green sector, China and Germany invested $10 million each in solar module and Taean offshore wind power projects, respectively.

Investment in new industries based on advanced technology and information and communication technology (ICT) amounted to $13.44 billion, a 59.6% increase from the previous year. The proportion of investment in new industries also rose by 4.9 percentage points to 45.5% of total investment.

Additionally, the manufacturing investment share in core materials, components, and equipment (SoBuJang) increased from 64.6% in 2020 to 70.3% last year, contributing to supply chain stabilization.

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