The Ministry of Trade, Industry and Energy announced on Tuesday that the foreign direct investment (FDI) newly pledged in 2016 reached a record high of USD 21.3 billion, showing a 1.9 percent rise from $20.91 billion a year ago.
This figure marked the largest amount of FDI pledged in history for a four-quarter-period, surpassing the earlier record of $20.91 billion set in 2015. The amount of new FDI into the country has now surpassed the $20 billion mark for two years in a row, according to the Ministry.
Greenfield investment grew by 6.5 percent to $15.02 billion in 2016 from a year earlier, the ministry said. Greenfield investment refers to a form of FDI with which a parent company builds its operations in a foreign country from the ground up.
Despite the Brexit in the UK, the new FDI committed to the country last year came largely from European countries’ investments in the manufacturing and service sectors including chemical engineering and finance.
New FDI pledges from the European Union almost tripled to $7.4 billion in 2016, on a rise in investments in the chemical engineering and financial service sectors, accounting for 34.7 percent of the total FDI commitments. Meanwhile, new FDI pledges from China climbed 3.6 percent year-on-year to $2.05 billion.
However, U.S. firms made investments worth $3.88 billion over the same period, falling 29.3 percent from a year earlier, while Japanese investments sank for the fourth straight year to just $1.25 billion last year.
The manufacturing sector received $5.13 billion in FDI pledges, showing a 12.4 percent leap from the previous year, demonstrating international interest in electronic vehicles and robots. FDI in the service sector also rose to $15.51 billion, up 5.3 percent from the previous year.
FDI arriving into Korea, however, tumbled to a $9.76 billion, a fall of 40.9 percent year-on-year, which is attributed to a sharp decline in investment pledges made through merger and acquisition (M&A) deals.