In a testament to the enduring appeal of Korea as an investment destination, foreign investment pledges surged to a historic high of $7.05 billion in the first quarter of 2024, according to data released by the Ministry of Trade, Industry and Energy on Tuesday.
This remarkable figure represents a significant 25.1 percent increase compared to the same period last year, signalling robust confidence from foreign investors in Korea’s market environment.
However, despite the surge in pledges, the realised amount of foreign direct investment (FDI) witnessed a notable decline, nearly halving with a 49.6 percent year-on-year decrease to $1.85 billion.
Park Deok-yeol, Director General of Foreign Investment at the Industry Ministry, attributed the record-high pledges to the unwavering trust of foreign investors in the market environment of Korea, even amidst challenging economic circumstances.
Explaining the decline in realized investments, Park pointed to the global economic landscape, marked by foreign exchange weaknesses and high interest rates, which may have impacted foreign companies’ execution of pledged investments. He further noted a lag between the initial commitment and the actual execution of investments, which could span from months to years, expecting the figure to gradually catch up.
Breaking down the industry trends, the manufacturing sector witnessed a remarkable 99.2 percent year-on-year jump in pledged FDI, reaching $3.08 billion. Notably, investments in electronics manufacturing, particularly semiconductors, saw a staggering 113.5 percent increase, amounting to $1.45 billion.
Conversely, the service sector experienced a modest decline of 2.5 percent, amounting to $3.85 billion in pledged investments.
Greater China emerged as a significant contributor, accounting for 30.1 percent of the total FDI pledges, with a notable 146.7 percent increase compared to the previous year. Japan, the United States, and the European Union also played significant roles, collectively contributing to the robust FDI landscape in Korea.
With the government aiming to attract FDI pledges worth $35 billion this year, surpassing last year’s record of $32.7 billion, Korea’s investment landscape appears poised for continued growth and resilience.
