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Foreign direct investment pledged to Korea reach $9.9 billion in H1 2019-07-15

The Ministry of Trade, Industry and Energy announced on July 11 that foreign direct investment (FDI) pledged to Korea in the first half of this year dropped 37.3 percent year-on-year to USD 9.9 billion. The FDI received by the country over the same period decreased 45.2 percent to $5.6 billion. These declines are mostly attributable to a base effect and a slowdown in global investment activities.
Despite the decreases, both numbers remained above their ten-year averages, which are $8.5 billion and $5.2 billion, respectively.

By quarter, the FDI pledged in the second quarter recorded $6.7 billion, greater than twice the amount of its previous quarter, which was $3.2 billion.

The FDI pledged in the first six months had four key characteristics.

First, FDI was continuously made in advanced materials industries that develop and produce items such as nanomaterials, polymers, and semiconductor materials. Investment was also committed to building their production facilities that would benefit from both domestic process control system and foreign technology.

Second, foreign investors were highly interested in the promising Korean bioindustry because of its talented research and development professionals and the country’s medical system. More business models are combining information technology with healthcare systems, and investment in those enterprises is growing.

Third, investors were attracted to Korean wave-based cultural services and consumer goods. Concerts, art activities, and e-sports that embrace K-beauty and K-pop had greater commitments from foreign investors. The cosmetics sector drew attention from global brands. Online-to-offline and cold chain industries were also popular with investors.

Fourth, active investment was made in mobile platforms and other tech-based services. Foreign Investors focused on Korean startups that provide services such as pet care, electronic commerce, and shared kitchen.

By country, 
FDI pledged from the U.S. to Korea moved up 3.1 percent year-on-year to $3.1 billion while that arrived fell 65.9 percent to $625 million. FDI pledged from the EU went down 41.5 percent to $2.7 billion, and that arrived dropped 12.8 percent to $2.9 billion.
On the other hand, Japan’s pledged investment declined 38.5 percent to $540 million, and that arrived decreased 51.2 percent to $328 million. Chinese Investment pledged to Korea shrank 86.3 percent to $301 million and that arrived also fell 90.0 percent to $72 million.

By industry, the manufacturing sector saw a pledged investment of $3.1 billion, down 57.2 percent year-on-year. The FDI arrived in manufacturing sank 75.0 percent to $1.3 billion. The service sector experienced a pledged investment of $6.7 billion, down 19.7 percent. The FDI arrived in service also decreased 27.5 percent to $3.5 billion.

By type, greenfield investment pledged to Korea dropped 44.9 percent to $7.1 billion, and that arrived sank 61.3 percent to $3.1 billion. For merger and acquisition (M&A) investment, foreign investors pledged $2.8 billion, down 4.3 percent. Meanwhile, M&A investment that arrived improved 9.4 percent to $2.6 billion.

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