FDI on marked decrease in March

Foreign direct investment (FDI) is rapidly declining this year, government officials said Friday.

According to the Commerce, Industry and Energy Ministry, foreign direct investment in Korea amounted to $800 million last month, down 19.1 percent from $989 million in the same month a year earlier, with the number of investment cases also dropping 12.4 percent to 340.

FDI in the first three months of this year rose 64.5 percent from $2.7 billion a year earlier to $4.56 billion. However, officials said, if the sale of $2.96 billion worth of SK Telecom shares is excluded, the first-quarter figure represents a drop of 77 percent from a year earlier.

SK Group is now proceeding with negotiations to hand over a 14.5-percent stake in SK Telecom held by SK Corp. and SK Global to Nippon Telegraph and Telephone (NTT) DoCoMo of Japan. But the talks are making little headway due to the fall of SK Telecom`s stock price. The stake is now in the hands of Signum IV, a foreign financial service company.

Foreign investments from Japan dropped most rapidly in the first quarter, down 27.6 percent to $184 million from $250 million a year earlier, and the number of investment cases fell to 133 from 141. A ministry official attributed the drop to the fact that Japanese companies are reluctant to make foreign investments as Japanese financial institutions tighten accounting inspections on top of a slump.

Lee Byong-Ki eye@donga.com