Foreign investment pledges reach new high to $7.05 billion in Q1

An employee organizes dollars at Hana Bank in central Seoul. [YONHAP]

Foreign investment pledges in Korea reached $7.05 billion in the January-March period this year, a record for the first quarter, according to the latest data from the Ministry of Trade, Industry and Energy on Tuesday.

It is a 25.1 percent increase from the same period the previous year.

Meanwhile, the realized amount of foreign direct investment (FDI) nearly halved with a 49.6 percent on-year decrease to $1.85 billion.

“Korea’s FDI pledges hit another record after last year’s all-time high in the first quarter of this year despite the difficult economic circumstances,” said Park Deok-yeol, director general of foreign investment at the Industry Ministry, adding that “it is a testament to foreign investors’ firm trust in the Korean market environment.”

Regarding the steep fall in the realized investments, Park said that “the current global economic situation, with foreign exchange weaknesses and high interest rates, seems to have had an impact on foreign companies’ execution of pledged investments.”

The director general explained that “a lag between the initial commitment and the actual execution of investments also played part, which may span from months to years,” adding that the figure will gradually catch up.

By industry, the manufacturing sector saw a 99.2 percent on-year jump in the pledged amount of foreign direct investments to $3.08 billion. Investment pledges in electronics manufacturing, which includes semiconductors, grew 113.5 percent to $1.45 billion.

The service sector, on the other hand, declined 2.5 percent to $3.85 billion.

Greater China accounted for 30.1 percent at $2.12 billion of the total FDI pledges, up 146.7 percent. Japan was responsible for 16 percent, the United States for 10.2 percent and the European Union for 8 percent.

The government aims to bring in FDI pledges worth $35 billion this year, compared to last year’s $32.7 billion.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]