Foreign Direct Investment of $17.1 Billion in First Half of This Year... 'Record High'

US and EU Expand Investment in Advanced Manufacturing and New Energy Industries
Impact of US-China Strategic Competition and External Environment

Foreign Direct Investment (FDI) in the first half of this year nearly reached $17.1 billion, marking the highest performance on record for the first half since statistics began in 1962. This achievement is attributed to government support measures such as tax reforms to promote private investment and regulatory innovations, alongside the strategic competition between the U.S. and China, which has made South Korea an attractive investment destination. The Ministry of Trade, Industry and Energy expects that, following last year, investment funds are likely to exceed $30 billion again this year if this trend continues.

On the 4th, the Ministry announced that FDI in the first half of this year reached $17.09 billion based on reported figures, a 54.2% increase compared to the previous year. On an arrival basis, it was $7.75 billion, up 6.3% over the same period.

The increase in investment funds is attributed to expanded investments in advanced manufacturing sectors such as semiconductors, secondary batteries, and biotechnology in the U.S. and European Union (EU), as well as new energy industries like hydrogen and offshore wind power. The rise in manufacturing investment is also significantly influenced by BlackRock, the world's largest asset management company, acquiring a 30% stake in domestic industrial gas manufacturer Airfirst last month.

On the 30th, Prime Minister Han Duck-soo announced via social media ahead of the FDI first-half statistics release that the record high had been reached. Prime Minister Han stated, "This is the result of the South Korean government, led by President Yoon Seok-yeol, actively conducting economic and sales diplomacy," and added, "It has been reconfirmed that the world views South Korea as a safe investment destination." According to the Ministry, the achievements from President Yoon’s overseas visits ($3.14 billion) account for about 18% of the total reported amount.

There is also analysis linking this to external factors such as the U.S.-China supply chain decoupling. Professor Heo Yoon of Sogang University Graduate School of International Studies said, "Along with our technology and human resources level, South Korea’s geopolitically and geoeconomically advantageous position amid U.S.-China conflicts was also a factor in investment expansion," adding, "If the government offers benefits and favorable treatment such as corporate tax cuts and deregulation to capital entering the country, investment activation is likely to continue in the second half."

By industry, based on reported amounts, manufacturing ($7.63 billion) increased by 145.9%, services ($8.48 billion) by 11%, and other industries ($980 million) by 186.6% compared to the previous year. Manufacturing accounted for 44.0% of the total.

The number of reported cases in the first half was 1,649, a 0.7% increase from 1,637 cases in the same period last year. Services had the most with 1,345 cases, followed by manufacturing with 220 cases, and other industries with 84 cases.

Within manufacturing, electrical and electronics (663.0%), chemical engineering (464.1%), and pharmaceuticals (78.3%) increased, while textiles, fabrics, and apparel (-100%), food (-54.1%), metals and metal products (-27.6%), and machinery and medical precision equipment (-13.2%) decreased.

In services, business support and leasing (447.3%), accommodation and food services (250.6%), finance and insurance (185.5%), and wholesale and retail trade (19.0%) increased, whereas information and communications (-65.4%), real estate (-35.3%), and transportation and warehousing (-17.0%) decreased.

By country, Europe (including the UK) recorded $4.26 billion, a 144.8% increase compared to the previous year. The U.S. (24.1%), Greater China (32.8%), and other countries (74.3%) also saw significant increases. In contrast, Japan decreased by 33.4%.

By investment type, greenfield investments ($12.64 billion) increased by 53.1%, and mergers and acquisitions (M&A, $4.45 billion) rose by 57.3%. Greenfield investments refer to companies securing land themselves and directly operating new or expanded factories or business sites when making overseas direct investments. M&A investments involve acquiring shares of already established local companies or establishing joint ventures. By region, both the Seoul metropolitan area ($9.81 billion) and non-metropolitan areas ($3.82 billion) increased by 30.7% and 92.3%, respectively.

An official from the Ministry explained, "While external factors such as supply chain decoupling exist, foreign-invested companies highly value South Korea’s solid manufacturing base, excellent technological capabilities, and skilled workforce, considering it a strategic investment hub for advanced industries."

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