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Parts and materials technology development
Foreign direct investment pledged to Korea reach $7.7 billion in H1 2020-07-23

The Ministry of Trade, Industry and Energy announced on July 15 that foreign direct investment (FDI) pledged to Korea in the first half of the year fell 22.4 percent year-on-year to USD 7.7 billion. The FDIs that actually arrived in Korea over the same period declined 23.9 percent to $4.7 billion.             

Restrictions on cross-border movement and rising uncertainties due to COVID-19 led to the decline in FDI. However, investment pledges to several industries such as materials, parts and equipment, high-tech R&D, e-commerce, and online education were active.

The Ministry will set specific targets for FDI attraction in high-tech materials, parts and equipment as well as semiconductors, bio-health products, and future cars. In addition, the Ministry will make efforts to attract new investment strategically via online investment promotion, as the demand for “untact” services such as e-commerce and digital equipment is on the rise.

By country, FDI pledged from the U.S. to Korea in the first half of 2020 dipped 43.5 percent to $1.8 billion while that actually arrived decreased 20.9 percent to $523 million.

Investors from the EU (including the United Kingdom) committed $1.3 billion, down 51.2 percent from a year earlier. Their actual investment declined 63.9 percent to $1.1 billion.

New FDI commitments from Japan went down 15.0 percent to $457 million, and those arrived contracted 15.8 percent to $396 million.

Meanwhile, investments pledged from China and other regions (including Hong Kong, Singapore, Taiwan, and Malaysia) jumped 66.8 percent to $2.8 billion and those actually arrived expanded 53.0 percent to $1.7 billion.

By industry, the manufacturing sector saw a pledged investment of $2.3 billion, down 25.7 percent year-on-year. The FDI arrived fell 24.6 percent to $1.1 billion. Industries that saw growth were electrical and electronic devices and medicine and medical devices. On the other hand, machinery equipment and precision medical devices and transportation machinery saw decreases.

For the services sector, FDI pledged to Korea shrank 20.9 percent to $5.3 billion. The FDI arrived also dropped 10.2 percent to $3.6 billion. Growth was experienced in finance and insurance as well as R&D and technology. Decreases were seen in wholesale and retail, and real estate.

By type, greenfield investment pledged to Korea dropped 22.3 percent to $5.5 billion, and that arrived went down 32.1 percent to $2.4 billion.

For merger and acquisition (M&A) investment, foreign investors pledged $2.2 billion, which is 22.7 percent less compared to the first half of last year. Meanwhile, M&A investment that arrived went down 13.2 percent to $2.3 billion.

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