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S. Korea’s Direct Investment in Japan Rises 42% in Q1
A Tariff War Would Increase Korea's Direct Investment in Japan
S. Korea’s Direct Investment in Japan Rises 42% in Q1
  • By Jung Min-hee
  • July 11, 2019, 10:31
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South Korean companies' direct investment in Japan is expected to rise if Japan increases tariffs on Korean products.

South Korea’s direct investment in Japan came to 317 billion won (US$268.30 million) in the first quarter of this year, up 42 percent, or 95 billion won (US$80.41 million), from a year earlier.

South Korean companies invested 25.90 billion won (US$22.01 million) in January, 49.50 billion won (US$42.07 million) in February and 240.60 billion won (US$204.50 million) in March this year, according to the Export-Import Bank of Korea (Korea Eximbank) and the Korea International Trade Association on July 10.

The first-quarter total represented a 42 percent jump from the 222 billion won (US$188.70 million) during the same period last year.

South Korea’s direct investment in Japan have waxed and waned since 2015. As for the future, the outlook is mixed. Some say that Korea’s investment in Japan will drop in the future due to the Japanese government’s economic retaliation against Korea. Yet other analysts say that the figure will rather rise if Japan expands its retaliatory measures into tariffs.

In fact, China’s investments in the United States increased to avoid tariff risks after the United States imposed trade sanctions against China. A Korea Eximbank official said, “If Japan imposes trade sanctions, including tariffs, Korean company may seek to reduce risks by directly investing in Japan.”

Financial authorities currently focus on monitoring Japan’s economic sanctions. They say that the current situation is not so worrisome as Japan has not announced specific sanctions related to the financial sector. However, they are working together with related ministries to strengthen monitoring.