Due to COVID-19
Foreign direct investment (FDI) in Korea shrank by more than 11 percent in 2020 due to COVID-19, the Ministry of Trade, Industry and Energy said on Jan. 12.
FDI has sunken by a double-digit figure for two consecutive years after reaching an all-time high in 2018.
The ministry said FDI in Korea reached US$20.75 billion in 2020 based on report amounts. In terms of investment arrivals, FDI fell 17.0 percent to US$11.09 billion. It declined 22.4 percent in the first half of 2020 when the spread of COVID-19 began in earnest. The pace of decline slowed to 2.8 percent in the second half.
Despite the decline in 2020, FDI in Korea remained above US$20 billion for the sixth consecutive year and was relatively not bad compared to the global FDI trend. In fact, in the first half of 2020, global FDI was tallied at US$399 billion, down 49 percent from US$777 billion a year earlier.
In 2020, FDI in Korea was characterized by an increase in investment in new industrial areas related to the fourth industrial revolution such as artificial intelligence (AI), big data, cloud computing, eco-friendly cars, and biotechnology. The amount of reported investment in these areas climbed 9.3 percent on year to US$8.42 billion. The figure amounted to 40.6 percent of the total FDI, an increase of 7.6 percentage points from a year before.
In addition, investment in renewable energy such as wind and solar energy and the green industry such as water treatment and resources recycling spiked 101.4 percent on year to reach US$480 million.
Investment in high-tech materials, parts and equipment such as semiconductors, secondary batteries, and parts for eco-friendly cars lessened 7.0 percent to US$3.81 billion based on reported figures. Investment in the high-tech materials, parts and equipment sectors plunged 43.7 percent in the first half, but recovered by spiking 30.9 percent in the second half.
By country, FDI in Korea by countries with high Chinese capital such as China, Hong Kong, Singapore, Taiwan and Malaysia added up to US$5.46 billion, up 26.5 percent from the previous year. In particular, China’s FDI in Korea jumped 102.8 percent to US$1.99 billion. On the other hand, FDI figures by the U.S. (US$5.3 billion), the European Union (US$4.72 billion), and Japan (US$730 million) fell 22.5 percent, 33.8 percent, and 49.1 percent, respectively.