Industrial growth: A container vessel of Hanjin Shipping is docked at a terminal of the port of Busan. The surge in economic activity in the country is credited to restored investor confidence after the launch of a new administration last June. — AFP
SEOUL: Foreign direct investment or FDI commitments to South Korea hit a fifth consecutive record last year, rising 4.3% to US$36bil, while actual inflows jumped 16.3% to US$17.95bil, the Trade, Industry and Resources Ministry says.
The government credited the surge to restored investor confidence after the launch of a new administration in June, which reduced political uncertainty and stabilised expectations for the economy.
“Along with the new administration’s push on artificial intelligence (AI) policy, the government’s investment promotion efforts during the Asia-Pacific Economic Cooperation (Apec) leaders’ summit in Gyeongju also supported the growth in foreign investment,” the ministry said.
Amid domestic political uncertainty following the martial law crisis and the impeachment of former president Yoon Suk Yeol, as well as tariff pressures from the United States, inflows struggled through the January-September period.
Investment rebounded in the fourth quarter with the presidential election in June and the 2025 Apec leaders’ summit in October. By type, greenfield investment, referring to new or expanded production facilities, rose 7.1% from a year earlier to US$28.59bil, marking an all-time high.
The increase followed major investment filings, including a data centre project by Amazon Web Services, the world’s largest cloud services provider, as well as semiconductor packaging investments by US-based Amkor Technology and process gas facilities by France’s Air Liquide.
While merger and acquisitions investment came to US$7.46bil, down 5.1% from a year earlier, the decline narrowed sharply from a 54% slump recorded in the third quarter last year, the ministry said.
By sector, manufacturing investment rose 8.8% to US$15.77bil. Investment surged in chemicals, which reached US$5.81bil, up 99.5%, and metals, which jumped 272.2% to US$2.64bil.
The Trade Ministry said investment was concentrated in core materials used in advanced industries, reflecting efforts to strengthen supply chains amid external uncertainties.
Investment in electrical and electronics declined 31.6% to US$3.6bil, which the ministry attributed to a base effect following large-scale investment by major chipmakers such as Samsung Electronics and SK hynix last year.
Service sector investment increased 6.8% to US$19.05bil, supported by growing investment in online platforms and AI data centres. Inflows rose sharply in distribution, which jumped 71% to US$2.93bil, and information and communications, which increased 9.2% to US$2.34bil.
By source country, investment from the United States surged 86.6% to US$9.77bil, while investment from the European Union rose 35.7% to US$6.92bil. In contrast, investment from Japan fell 28.1% to US$4.4bil and inflows from China declined 38% to US$3.59bil.
“Inflows linked to advanced industries such as AI and semiconductors expanded last year and are expected to support South Korea’s economic and industrial growth,” a trade ministry official said. The ministry said it will expand incentives to attract foreign investment. — The Korea Herald/ANN
