Overall FDI commitments into South Korea broke records in 2018, driven by pledges from Europe and US and renewed interest from Chinese companies.
FDI commitments into South Korea amounted to $26.9bn in 2018, an increase of 17.2% from the 2017 total, according to the ministry of trade, industry and energy. This marks the fourth consecutive year that FDI into South Korea exceeded $20bn.
New FDI commitments from the EU grew by 26.9% year-on-year to a record high of $8.92bn, a third of total FDI inflows, as investors exhibited further interest in the South Korean finance and service sectors.
“In addition to the easing of geopolitical risk on the peninsula, exports breaking $600bn and the maintenance of an extensive free-trade network helped Korea remain an attractive investment location”, Lee Ho-joon, director general of investment policy at the ministry told the Korea Joongang Daily.
Investment pledges by US companies increased by 24.8% to $5.88bn as they pursued partnerships and acquisitions in high-tech industries and tech start-ups.
New FDI commitments from China grew 238.9% to $2.74bn, accounting for 10.2% of total FDI inflows in 2018, led by investments in the real estate and service industry. This substantial increase is partly a result of meagre Chinese FDI into South Korea in 2017, when Beijing imposed restrictions on overseas investments to tackle capital flight.
New FDI commitments from Japan fell by 29.4% to $1.3bn, accounting for just 4.8% of the total, as Japanese companies increasingly target China and south-east Asian nations.
From January to November 2018 there were 108 greenfield FDI projects undertaken in South Korea, a 13.7% increase year-on-year, according to greenfield FDI database, fDi Markets.
Co-working office space provider WeWork led the way, undertaking 12 greenfield FDI projects in South Korea, reasserting the company’s position as the most active global investor in terms of greenfield FDI projects in 2018. However one of WeWork’s main investors, Japanese giant Softbank’s $100bn Vision Fund, has scrapped previous plans to pump $16bn into the loss-making co working company this year. The new figure of $2bn is a fraction of what was originally on the table.
Greenfield investments made up 77.4% of new investments in the South Korea’s manufacturing sector according to The Investor, an English-language business news website based in the capital Seoul. Despite the injection of capital, manufacturing business activities made up only one fifth of the total greenfield FDI projects, according to fDi Markets.