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Korean FDI reaches record high

Mar 14,2018
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Korean investment abroad rose to an all-time high last year, spurred by a bullish overseas equity market, data from the Ministry of Strategy and Finance showed Tuesday.

Foreign direct investment by Korean entities increased 11.8 percent between 2016 and 2017 to reach $43.7 billion. Money was heavily concentrated in finance and insurance, which accounted for 29 percent of total investment committed, followed by wholesale and retail with 22 percent and manufacturing with 18 percent.

Real estate investment accounted for 9 percent.

Of note, investment in finance and insurance surged to an all-time high, growing 47.5 percent to $12.7 billion. Wholesale and retail investment rose 64.9 percent year on year to $9.56 billion.

Investment in manufacturing and real estate, on the other hand, shrank. Manufacturing investment fell 3.4 percent to $7.84 billion, while real estate investment took a nosedive of 43.3 percent to $3.76 billion.

By region, investment in Europe grew the most, 55.6 percent compared to a year ago to $6.85 billion, but in terms of market, investment in Hong Kong saw the sharpest increase, nearly doubling from $1.56 billion in 2016 to $2.97 billion in 2017.

Still, the largest overseas destination remains the United States, which accounted for 25 percent of all foreign direct investment committed by Koreans last year. The amount grew 12.8 percent year on year to $15.3 billion.

Investment to the Cayman Islands rose 11.6 percent to $4.98 billion. The tax haven was the second most popular destination for Korean investment, accounting for 11 percent.

China, on the other hand, saw investment fall 11.9 percent to $2.97 billion, while investment in Vietnam dropped 17.5 percent to $1.95 billion. Both countries are considered manufacturing powerhouses.

Another distinctive feature of last year’s foreign direct investment: green field investments, which created new companies, fell 2.1 percent, while brown field investments, which include buying equity in existing businesses as well as mergers and acquisitions, increased 33.6 percent.

“Foreign direct investment is expected to maintain its current growth, considering asset management companies are increasing their investments in overseas assets in order to diversify their portfolios,” a Finance Ministry official said, “and considering M&As are active abroad as [Korean] companies are finding ways to expand to new markets overseas and securing advanced technologies.”


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