Foreign Direct Investment Declarations in Q1 Reach $5.63 Billion...Record High Achieved

Greenfield Investment Increases by 13%
EU and Greater China Investments Up, US and Japan Down

Foreign Direct Investment (FDI) declarations in the first quarter of this year reached an all-time high.

The Ministry of Trade, Industry and Energy announced on the 6th that the first quarter FDI trend recorded $5.63 billion, a 3% increase compared to the same period last year ($5.45 billion) based on declarations. This is the highest declaration record following the first quarter of 2022. However, on an arrival basis, the amount was $3.38 billion, down 27.7% compared to last year's same period ($4.68 billion).

Foreign Direct Investment refers to capital movements made to acquire lasting interests such as management participation in companies located in Korea. It is distinguished from indirect investment, which refers to bond or stock investments aimed solely at generating dividend or interest income.

In particular, the Ministry explained that greenfield investment, which has a significant employment creation effect in advanced industries such as semiconductors, chemical engineering, content, and renewable energy sectors, increased by 13% to $4.18 billion. Greenfield investment refers to the method where overseas capital directly establishes factories or business sites in the investment target country.

Annual Foreign Direct Investment (FDI) Reported Amount, Arrival Amount, and Number of Cases

By industry, manufacturing recorded $1.54 billion, down 6%, while services recorded $3.95 billion, up 5%. Within manufacturing, sectors such as electrical and electronics (769%), transportation machinery (104%), and chemical engineering (53%) increased, and in services, sectors such as leisure, sports, and entertainment (5167%) and business support and rental (1956%) grew.

By country, investments from Europe and the Greater China region increased to $2.08 billion (258%) and $1.4 billion (18%), respectively, while investments from the United States and Japan decreased to $750 million (-14%) and $300 million (-38%), respectively.

Mergers and acquisitions (M&A) type investments decreased by 16% to $1.45 billion. New investments through the establishment of new corporations increased significantly by 92% to $2.84 billion. Additional investments reinvested in existing corporations recorded $2.74 billion, down 29%.

Regionally, among the 17 metropolitan cities and provinces, investments flowing into the Seoul metropolitan area including Seoul, Incheon, and Gyeonggi recorded $3.52 billion, down 17% compared to the same period last year, while investments to regions outside the metropolitan area increased by 46% to $1.37 billion.

An official from the Ministry of Trade, Industry and Energy stated, “To expand the attraction of foreign direct investment, we plan to improve the domestic investment environment by strengthening investment support systems such as revising the cash support system operation guidelines and actively innovating regulations, and continue investment attraction and promotional activities linked with normal diplomacy and inter-country economic cooperation events.”

[Image source=Yonhap News]

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