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FDI pledged to Korea reach $20 billion six years in a row 2021-01-12

The Ministry of Trade, Industry and Energy announced on January 12 that foreign direct investments (FDI) pledged to Korea in 2020 recorded USD 20.7 billion, reaching $20 billion for six consecutive years since 2015.

FDI commitments lost 11.1 percent last year amid the COVID-19 pandemic. The FDI that actually arrived in Korea decreased 17.0 percent to $11.1 billion.

With the outbreak of the virus, the FDI decreased significantly in the first half of the year, but the decline was greatly mitigated with Korea’s quarantine efforts, virtual IR meetings, and strategies to attract promising investors.

New industries related to the 4th Industrial Revolution technologies such as Artificial Intelligence, big data, cloud computing, eco-friendly vehicles, and bio-health products saw noticeable improvements. FDI pledged to these industries expanded 9.3 percent to $8.4 billion.

High-tech materials, parts and equipment sectors including semiconductors, secondary batteries, and eco-friendly auto parts attracted continued interests in R&D investments. In particular, investments to develop and manufacture electric vehicle parts and to diversify supply chains of chips and display materials, parts and equipment in response to Japan’s export restrictions were active.

Investment in Korea’s Green New Deal projects also went up and FDI pledges to accelerate low-carbon energy transition were noticeable.

The government will continue with efforts to attract high-technology materials, parts, and equipment R&D, new industries, and Green New Deal investments that will contribute to the advancement of Korea’s industries.

By country, new FDI commitments from the U.S., the European Union, and Japan decreased, while those from China and other regions (including Hong Kong, Singapore, Taiwan, and Malaysia) increased.

FDI pledged from the U.S. to Korea fell 22.5 percent year-on-year to $5.3 billion, while those actually arrived dropped 34.5 percent to $912 million. FDI pledged from the EU to Korea contracted 33.8 percent to $4.7 billion, but those arrived dipped 47.0 percent to $3.8 billion. The Japanese investment pledged to Korea went down 49.1 percent to $727 million while that arrived decreased 57.9 percent to $501 million.

China and other regions’ pledged investments in Korea climbed up 26.5 percent to $5.5 billion, and those arrived also rose 34.4 percent to $2.9 billion.

By industry, the amount of FDI pledges in the manufacturing sector dropped 27.4 percent to $6.0 billion and that of FDI arrivals fell 57.4 percent to $2.1 billion. Investments in electrical and electronic devices and food experienced improvements, but those in machinery equipment and precision medical devices and paper and timber saw decreases.

For the service sector, FDI pledged to Korea edged down 2.7 percent to $14.4 billion, but those arrived gained 13.0 percent to $8.7 billion. While investments in finance and insurance and logistics went up, those in wholesale and retail and real estate fell.

By type, greenfield investments pledged to Korea went down 8.8 percent to $14.5 billion, and those arrived also slipped 8.2 percent to $6.0 billion. For merger and acquisition (M&A) investments, those pledged to Korea recorded $6.2 billion (down 16.0 percent) and those arrived totaled $5.1 billion (down 25.5 percent).

 

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