ΆΓ Foreign investment in July totaled $2.12 bil.

 KoreaHerald 2000.08.08

    Foreign direct investment (FDI) in Korea totaled $2.12 billion in July, up just 2.2 percent from a year earlier, the Ministry of Commerce, Industry and Energy said yesterday.

    The July growth rate paled next to the average 20.0 percent growth for this year to July, but marked the largest monthly FDI amount this year. In July, the number of direct foreign investments totaled 364, slightly more than the monthly average of 350.

    The total FDI during the first seven months of this year reached $7.85 billion. The 20.0 percent growth from last year was fueled by a surge in investment from Japan and such tax havens as Bermuda, Cayman Islands and British Virgin Islands.

    Investment from Japan totaled $1.18 billion, up 273.9 percent, while those from tax havens more than doubled, according to the ministry.

    In contrast, investment from the United States fell 5.4 percent on year to $1.09 billion, while that from the European Union plummeted 64.2 percent to $1.31 billion. The ministry attributed this fall to the tendency for investors from these countries to use the strategy of setting up firms in tax havens for investment in Korea.

    FDI in the form of acquisition of newly issued stock, either through incorporation of new enterprises or participation in equity increases of existing firms, accounted for 93.9 percent, or $7.37 billion, of the total FDI, while acquisition of outstanding stock fell 66 percent.

    The ministry explained that foreign investors have shifted their strategy from taking over existing firms to launching new ventures in Korea.

    Small-denomination investments below $5 million per case increased 158 percent on year, those ranging from $5 to $10 million increased 59 percent, while investments ranging from $10 to $100 million dropped 9.9 percent.

    Investment was particularly strong in the manufacturing sector during the January-July period.

    FDI in the manufacturing sector rose 35.4 percent on year, totaling $4.43 billion, thanks to an increase in investment in electronics, machinery and metal companies. Investment in the service sector climbed 4.8 percent to $3.42 billion, the commerce ministry said.

    A ministry official said the government expects FDI to climb to $16 billion for the whole of this year from 1999's record-high of $15.54 billion.