[ Investment > FDI Report ]

oreign direct investment into Korea for the third quarter was down again on a yearly comparison falling by 19.9 percent to $1.97 billion compared to the $2.459 billion recorded in the same period the year previous.

  However, while the third-quarter results indicated four consecutive quarters of decline, they also marked a sharp slowing in the rate of decline of inbound capital. As compared to the 19.9 percent falloff for the thirdquarter, FDI was off 41.4 percent in the second quarter, by 48.4 percent in the first, and by 63.7 percent in the last quarter of 2002. Also, FDI was up notably on a quarterly comparison, surging by $417 million or 20.6 percent on the second quarter total of $1.553 billion.

  Cumulative FDI for 2003 to the end of September was off by 36.1 percent, falling to $4.631 billion compared to the $7.243-billion total for the first three quarters for 2002.

  The Ministry of Commerce, Industry and Energy (MOCIE) attributed the decline in inbound FDI into Korea as part of the overall global economic slowdown that has negatively impacted upon cross-border investments worldwide, with most countries in the world experiencing declines in capital inflows, exceptions being China and Vietnam.

  Korea¡¯s FDI target for 2003 is $6 billion, which following the conclusion of the third quarter is more than 77 percent accomplished. The third-quarter target of $1.47 billion was exceeded by $500 million, or 33 percent. Of the $1.97 billion FDI total for the quarter, almost 75 percent was invested into the service sector, in particular, insurance and finance, while in manufacturing foreign investment was attracted business lines such as power generation, gas and construction.

  By region, investments from the European Union accounted for the lion¡¯s share, amounting to $1.38 billion or 70 percent of the total, and representing a sixfold increase on the $240 million received from the EU in the second quarter. Within the increase, Thysennkrupp of Germany and Prudential of Britain significantly increased their capitalizations. Conversely, capital inflows from the United States were off dramatically, falling from $1.3 billion in the second quarter to $400 million in the third.

  Meanwhile, Korea has set a goal of increasing the proportion of the stock of foreign direct investment in gross domestic product from the current 10-percent level to 14 percent by 2010. Kim Jin-Pyo, Minister of Finance and Economy made the announcement Oct. 13th at the closing session of the 12th East Asia Economic Summit.