Foreign direct investment up 35% on year in March, ministry reports

KOREA Herald 2000/04/07

Although foreign direct investment during March rose 34.9 percent on year in terms of amount, Korea saw the highest ever number of overseas investments during the same period, the Ministry of Commerce, Industry and Energy said yesterday.

Korea saw 370 separate cases of foreign direct investment (FDI) last month, totaling $981 million, while FDI during the first three months of this year amounted to $2.73 billion, up 36.2 percent compared to the same period a year ago.

According to the ministry, the previous record in FDI cases was during January of this year, which recorded 304 cases.

"Due to revisions in investment regulations and a strengthened investor confidence, there has been a drastic increase in small-scale investments," said Park Jun-ki, an official at the investment promotion division at the ministry.

Foreign direct investments totaling less than $5 million surged 154.9 percent on year during the first three months of this year, accounting for 93 percent of direct investments from abroad recorded during the same period.

Among the major cases of foreign direct investment last month were the acquisition of Hanbo Iron and Steel Co. by the United States-based Nabors Consortium for $480 million and a $54 million acquisition of a water treatment plant from Hyundai Petrochemical by France's Vivendi Water.

The ministry said that foreign direct investment has been increasing in the domestic manufacturing sector, which surged 139 percent on year to total $1.57 billion during the first three months of this year.

Foreign direct investment in Korea's electronics industry totaled $944 million, while investments in the domestic metal fabrication industry amounted to $486 million over the same period, the ministry said.

However, foreign direct investments into the domestic service industry fell 13.5 percent during the first three months of this year. The ministry attributed the fall to declining investments into the domestic hotel industry.

Another interesting trend was a 542 percent increase in foreign direct investments from the West Indies, Malaysia and Singapore.

The ministry said that more and more companies based in the U.S. and the European Union have established registered companies in areas with lenient tax standards, such as Labuan, Malaysia, Singapore and the West Indies.

Meanwhile, foreign direct investment from Japan also surged 113.4 percent during the first three months of this year, while foreign companies chose to invest $2.47 billion through purchases of new shares in Korean firms, the ministry said. Purchases of new shares in Korean companies rose 62.9 percent on year during the first three months of this year, accounting for 90.3 percent of foreign direct investments.

by Samuel Len Staff reporter