Last Year Foreign Direct Investment Hits Record High of $30.5 Billion

[Asia Economy Sejong=Reporter Dongwoo Lee] Last year, foreign direct investment (FDI) surpassed $30 billion, achieving the highest record since statistics began in 1962. Strengthening foreign investment support systems, regulatory innovation, and enhanced economic cooperation between countries through summit diplomacy played key roles.

The Ministry of Trade, Industry and Energy announced on the 3rd that last year's FDI reached $30.45 billion based on reported amounts, a 3.2% increase compared to the previous year. However, on an arrival basis, it was $18.03 billion, a 3.1% decrease during the same period.

By industry, manufacturing increased by 149.4% and other industries by 47.7% based on reported amounts. Manufacturing accounted for 41.0% of total foreign investment. However, the service sector, which had the highest share at 54.5% based on reported amounts, decreased by 29.6% during the same period.

The number of reported cases last year was 3,463, a 12.1% increase compared to 3,088 cases in 2021. The service sector had the most with 2,900 cases, followed by manufacturing with 402 cases, and other industries with 161 cases.

Within manufacturing, FDI increased in textiles, fabrics, and apparel (3402.5%), chemicals (482.5%), metals and metal products (399.0%), electrical and electronics (135.6%), and food (82.4%). Meanwhile, non-metallic minerals (-59.8%), pharmaceuticals (-58.4%), and paper and wood products (-52.8%) decreased.

In the service sector, transportation and warehousing (198.1%) and wholesale and retail trade (19.1%) increased, while business support and leasing (-99.1%), public and other services (-81.9%), and leisure, sports, and entertainment (-69.3%) saw reduced investment.

By country, the United States saw a significant increase of 65.2% in reported amounts compared to the previous year. Japan (26.3%) and other regions (158.5%) also increased substantially. Conversely, the European Union (EU, -36.9%) and Greater China (-31.6%) decreased.

The number of reported cases increased in the United States (526 cases, 26.4%) and the EU (374 cases, 4.8%), while it decreased in Greater China (1,099 cases, -7.4%) and Japan (177 cases, -16.9%). Notably, the average amount per case increased from $12.6 million to $16.5 million in the United States and from $5.7 million to $8.6 million in Japan.

By investment type, greenfield investments (3,183 cases) increased by 23.3%, while mergers and acquisitions (M&A, 280 cases) decreased by 28.8%. Greenfield investment refers to a form of direct investment where a company secures land and establishes factories and business sites overseas to create employment. In contrast, M&A investments involve acquiring already established local companies or forming joint ventures. By region, the Seoul metropolitan area decreased by 26.6%, while regions outside the metropolitan area increased by 209.4%.

The Ministry of Trade, Industry and Energy stated, "Despite global economic uncertainties last year, foreign investment achieved record results thanks to a solid manufacturing base, institutional improvements, and efforts to attract investment, contributing to investment and job creation."