S. Korea’s Investment in US Significantly Increased Based on KORUS FTA

The Ministry of Trade, Industry & Energy of South Korea announced on March 14 that South Korea’s investment in the United States has almost tripled since the implementation of the KORUS FTA and the cumulative investment has almost doubled during the same period. South Korea and the United States commemorated the 15th anniversary of their FTA on March 15.

According to the ministry, South Korea’s investment in the U.S. totaled US$36.97 billion in the period of 2012 to 2016, up 60% compared to 2007 to 2011. Last year, the investment reached a record-high of US$12.9 billion.

According to the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce, the investment added up to US$22.8 billion from 2012 to 2015 whereas it stood at US$8.8 billion from 2008 to 2012. South Korea’s investment in the U.S. totaled US$40.1 billion between 1987, when records began, and 2015. The figure for last year is not available yet. Back in 2011, the amount had been US$19.9 billion. “The BEA conducts the calculation based on the investment actually arriving in the U.S. and, as such, its calculation is less than the South Korean government’s,” the ministry explained, adding, “The cumulative investment since the implementation of the KORUS FTA based on BEA data is estimated at more than US$50 billion.”

South Korean companies’ investment in the country was mainly directed to the manufacturing sector including automobile, consumer electronics, semiconductor and petrochemical.

Samsung Electronics is planning to expand its semiconductor manufacturing facilities in Austin, Texas by investing US$5 billion until 2021. LG Electronics is planning to build a washing machine factory in Tennessee by 2019 at an investment of US$250 million. Scheduled to be completed in 2019, the factory is expected to have an annual production capacity of one million units.

Lotte Chemical invests US$2.02 billion in Louisiana until 2019 to build an ethane cracker plant and the like. The facilities are expected to lead to US$1.5 billion in annual sales. Hankook Tire’s plant in Tennessee is slated to be completed in the first half of this year. The company invested US$800 million in the plant with an annual production capacity of 5.5 million tires.

Since the implementation of the free trade deal, South Korean companies have created more than 10,000 new jobs in the U.S. based on the deal. The average annual salary of the jobs they provide in the country is US$920 million, higher than those provided by any other Asian country.

In the meantime, the United States’ investment in South Korea more than doubled based on the FTA as well. Specifically, that amount was US$20.2 billion in 2012 to 2016 and US$9.5 billion in 2007 to 2011. In 2015, it hit a record high of US$5.48 billion.
 
Fields of investment have expanded from finance, insurance, wholesale and retail and electrical and electronics to cover information technology, biotech and so on, too. For instance, Amazon invested US$140 million for cloud business in South Korea in 2013. Microsoft made an investment of US$120 million last year.