FDI Plunges 20.6% in 2019
The Federation of Korean Industries (FKI) announced on May 20 that the foreign investment in South Korea reported in the first quarter of this year totaled US$3.27 billion, up 3.2 percent from a year ago, and the investment actually made in that period totaled US$2.41 billion, down 17.8 percent from a year ago.
In the meantime, the United Nations Conference on Trade and Development (UNCTAD) recently predicted that the global total overseas direct investment would show a decline of about 40 percent in 2020 and 2021. According to the Organization for Economic Cooperation and Development (OECD), the investment is likely to rebound in 2021 after showing a decline of at least 30 percent this year.
Last year, foreign investment in South Korea fell for the first time in five years. Specifically, the net inflow dropped 20.6 percent to US$10.57 billion whereas foreign investment in the 36 members of the OECD increased, for the first time in three years, by 6.3 percent to US$866.8 billion. The global total foreign direct investment edged down 1.1 percent in 2019 despite trade disputes and protectionism.
According to the FKI, the drop in net inflow is because investment conditions deteriorated in the form of abolished corporate tax incentives, shorter working hours and higher minimum wages. In a recent survey of the Korea Economic Research Institute, 74 percent of foreign-invested companies mentioned shorter working hours and higher minimum wages as their biggest business hurdles in South Korea.