Foreign Investment Fell for Fourth Year in a Row

Foreign investment in Korea fell for the fourth consecutive year.

The Ministry of Commerce, Industry and Energy (MOCIE) said in its report released on Tuesday that foreign investment in Korea amounted to $6.467 billion in 2003, a 28.9 percent decrease from the previous year.

Foreign direct investment was more than halved from last year, only 41.6 percent of the $15.542 billion invested in 1999.

Investment in Korea dropped by 2.1 percent in 2000, 25.8 percent in 2001, 19.4 percent in 2002, and almost 30 percent in 2003.

“The decrease was attributable to the deteriorating investment sentiment of multinationals caused by the global economic recession and the war in Iraq. Domestic risk factors such as the North Korea nuclear issue, labor-management disputes, and sluggish domestic demands, also played a role,” the ministry said.

“Annual amount of foreign investment exceeded $6 billion, a goal set by the government. The level of decrease in foreign investment went down, from -48 percent in the first quarter to -1 percent in the fourth quarter of 2003,” MOCIE added.

With a 84.1 percent rise in investment in Korea totaling $3.061 billion, the EU became the No.1 investor, overtaking the U.S. with $1.24 billion in investment last year.

The U.S. investment in Korea dropped 72.4 percent from the previous year while Japan’s investment in Korea fell 61.5 percent to only $541 million. Most industries saw big decreases in foreign investment last year. The manufacturing industry posted a -27.4 percent decline, the service industry a -19.5 percent drop, and the electricity, gas and construction industry a -60.9 percent decrease. Thanks to the growing automobile and semiconductor industries, however, the part and material sector attracted more foreign investment of $1.286 billion last year than the $1.210 billion in 2002. Large-scale foreign investments of more than $100 million rose 46.9 percent while investments of between $10 million and $100 million grew by a mere 10.2 percent. Lim Che-min, Director General for International Trade and Investment of MOCIE said, “In 2004, Korea is expected to attract $8 billion in foreign investment as the government makes active efforts to attract foreign investment amid global economic recovery.”

Eun-Woo Lee libra@donga.com