Investments going abroad
According to the KCCI, the average growth of Korean companies’ domestic investment slowed during the 2003-12 period to a mere 4 percent yearly, while their direct investment in foreign markets grew an average of 17.2 percent yearly in the same period. The gap in companies’ investments domestically and abroad deepened further compared to the 1993-2002 and the 1983-92 periods.
From 1983 to 1992, corporate foreign direct investment grew an average 23.1 percent yearly compared to 12.9 percent for domestic facility investment.
During the 1993-2002 period, companies’ foreign direct investment grew an average 10.7 percent while their spending on domestic facilities grew an average 4.8 percent every year.
The KCCI raised concerns that a slowdown in the companies’ domestic facility investment could put a drag on the country’s potential economic growth given that the growth in corporate foreign direct investment is already four times higher than that of corporate domestic facility investment for the period from 2003 to 2012.
Korean companies’ direct foreign investment from 1993 to 2002 is much higher than the world average (12.4 percent), or that of the top 20 countries (11.9 percent) and the Group of 8 average (10.9 percent).
To improve domestic investment, the KCCI suggested the government alleviate regulations, eliminate reverse discrimination, provide various aids to so called “U-turn” companies returning to the domestic market, and encourage companies to promote an entrepreneurial spirit to fix their positions in niche markets.
By Kim Mi-ju [email@example.com]
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