Record FDI for Korea in first half

Foreign direct investment (FDI) in the first half grew 12.5 percent on-year despite continuing tensions with North Korea, the threat from a weakening Japanese currency and slow global economic growth.

According to the Ministry of Trade, Industry and Energy, foreign investment in the first six months was $8 billion, which is the largest amount ever for the January-June period. During the same period last year, $7.1 billion was invested.

By quarter, investment in the April-June period grew 35 percent compared to the first three months of this year, to $4.6 billion. This is largely a result of easing tensions between the two Koreas, which have improved the investment environment.

“Despite an unfavorable situation including geopolitical risks, a weak yen and the stumbling economic economy, the FDI did relatively well,” said a ministry official.

“There are opportunities in the second half when there will be growing expectations of a global economic recovery as well as eased geopolitical tensions,” the official added. “Government institutions, including the Korea Trade-Investment Promotion Agency, will aggressively work on attracting more foreign investment.”

By region, investment from the U.S. and Europe grew while inflows from Japan fell sharply.

Investment from the U.S. surged 100 percent on-year to $2.52 billion. Investment from Europe expanded 77.3 percent to $2.48 billion.

On the flip side, investment from Japan shrunk 48.6 percent to $1.36 billion. In fact Japan’s investment in the manufacturing sector fell 27.2 percent on-year to $2.53 billion.

Japan and Korea have strong ties in the manufacturing sector, especially after Japan invested heavily in Korea’s part supplies makers in electronics and transportation.

Investment from China shrunk 16.2 percent on-year.

Foreign investments were concentrated in the services industries, which attracted $5.46 billion, up 52.6 percent from a year ago.

That is twice the size of the investments manufacturing was able to attract, which stood at $2.53 billion at the end of June.

Additionally, foreign investments through mergers and acquisitions surged 68 percent to $3.34 billion.

BY LEE HO-JEONG [ojlee82@joongang.co.kr]