FDI in South Korea

Overview by Globlatrade.net:

FDI in Figures

Under the effect of the world's recession, the flows of foreign direct investment (FDI) have reduced in 2009; later on, they started  to slowly increase again with the recovery, a trend that should be confirmed in 2011.

South Korea's appeal in terms of foreign direct investment (FDI) is the result of the country's fast economic development and the specialization of its industry in new information and communication technologies. However, the lack of general transparency in regulations is a major concern to foreign investors.

Foreign Direct Investment 200720082009
FDI Inward Flow (million USD) 2,6288,4095,844
FDI Stock (million USD) 119,63094,680110,770
Performance Index*, Ranking on 141 Economies 137123124
Potential Index**, Ranking on 141 Economies 1616-
Number of Greenfield Investments*** 728696
FDI Inwards (in % of GFCF****)
FDI Stock (in % of GDP) 11.410.213.3

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.


FDI Inflows By Countries and Industry

Main Investing Countries 2008, in %
United States 20.3
Japan 17.9
United Kingdom 8.2
Netherlands 7.1
Germany 6.9
Malaysia 5.0
France 5.4
Singapore 2.8
Main Invested Sectors 2008, in %
Manufacturing 28.6
Financial Intermediation 26.0
Real estate, renting and business activities 9.3
Transport, storage, communications 6.2

Source: OECD Stat Extracts

Form of Company Preferred By Foreign Investors
Limited Company
Form of Establishment Preferred By Foreign Investors
Greenfield investment (that for manufacturing differs from others Greenfield investment because it includes now only factory establishment, but also sales facilities).
Main Foreign Companies
Click here for the succesful stories of FDI on Invest Korea.
Sources of Statistics
Statistics from Invest Korea
Ministry of Commerce, Industry and Energy (MOCIE)
Korea National Statistical Office

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Why You Should Choose to Invest in South Korea

Strong Points
The Korean workforce is highly skilled. The R&D capabilities, as well as the quality of the infrastructures are deciding strong points for investors.
Weak Points
The laws and national regulations are restrictive and the manpower cost is high. Private real estate, as well as renting office or shop premises is expensive. Lastly, competitiveness is relatively restrained.
Government Measures to Motivate or Restrict FDI
Korea has implemented measures in order to protect Foreign Investment:
- External Remittance guarantees;
- Identical treatment to domestic firms with regard to business operations;
- Tax deductions provisions.

However, there are restrictions or prohibitions in terms of foreign investment in sectors of public administration, educational organizations, national defense, etc. For more information, see the Invest Korea website.

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