Major Japanese and Chinese companies increase investment in South Korea... Foreign direct investment in the first to third quarters hits record high - South Korean report

Investment in Korea, mainly from Japanese and Chinese companies, has been increasing rapidly since the beginning of this year. Amid a trend of restructuring of supply chains in global cutting-edge industries such as semiconductors and biotechnology, Korea
The Ministry of Trade, Industry and Energy announced on the 2nd that the cumulative amount of foreign direct investment from the first to third quarters of this year reached 25.18 billion dollars (approximately 3.68 trillion yen).
This is a 5.2% increase from the previous year and the highest amount ever. In particular, investment from Japan and China increased significantly. Investment from Japan increased 412.7% from the previous year to 4.69 billion yen.
Investment from China also increased 316.3% from the previous year to $4.57 billion (approximately 669 billion yen).
It is analyzed that foreign investors are flocking to South Korea in search of a relatively stable investment destination amid a battle between the US and China for dominance in cutting-edge industries.
During the period, the United States, which has implemented large-scale incentives and regulations in parallel to attract investment in advanced industries to its country, saw domestic investment of $3.12 billion (about 456 billion yen), up 3% from the previous year.
Intra-European investment also fell 1.4% from the previous year to $3.95 billion (approximately 578 billion yen).
By industry, investment in the manufacturing industry increased 36.4% year-on-year to $12.31 billion (approximately 1.8 trillion yen).
The service industry ($11.95 billion, or 1.75 trillion yen, down 13.3%) and other industries ($930 million, or 1.57 trillion yen, down 14.7%) led the increase in foreign direct investment.
Within the manufacturing industry, the Electrical and Electronics sector, which includes cutting-edge industries (4.51 billion dollars / approx. 660 billion yen, up 35.9%) and Machinery and Engineering (4.51 billion dollars / approx. 660 billion yen, up 35.9%) both saw a decline.
The increase in foreign direct investment in the manufacturing industry was notable, with the largest increase being in the equipment and medical precision industry (1.66 billion dollars/approximately 243 billion yen, an increase of 128.5%).
Separately, investment in building and expanding factories increased 12.8% from the previous year to $18.93 billion (approximately 2.77 trillion yen), accounting for more than three-quarters of the total.
Declared investments in mergers and acquisitions (M&A) fell 12.7% to $6.26 billion.
By type of funding, the increase in long-term loans, in which foreign companies lend money to Korean corporations, was notable, increasing 61.2% year-on-year.
The amount of new investment also increased by 8.1% compared to the previous year. However, increased investment through the acquisition of shares in Korean corporations and reinvestment of retained earnings decreased by 2.5%.
Of the investments declared from the first to third quarters, $12.69 billion (approximately 1.85 trillion yen) went to the capital region, $4.56 billion to the
The remaining third ($7.93 billion/approximately 1.16 trillion yen) has yet to be decided on an investment location.
However, when only foreign direct investment in designated areas is considered, the proportion of investment in non-metropolitan areas has decreased from 23.7% in the first to third quarters of last year to 23.7% in the first quarter of this year.
In the third quarter, it increased to 26.4%. An official from the Ministry of Trade, Industry and Energy said, "The amount of foreign direct investment in the world has been declining for two consecutive years due to the worsening situation in the Middle East and geopolitical risks associated with the friction between the US and China.
"However, investment in Korea has reached an all-time high, demonstrating that Korea is a stable and attractive investment destination that is attracting investment from companies around the world," he said. "In particular, the semiconductor and biotechnology sectors are
"As investment in cutting-edge industries such as these, as well as materials, parts and equipment, is increasing rapidly, we hope this will help stabilize the supply chain for Korea's cutting-edge industries and strengthen economic security," he said.