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Foreign-invested firms account for 11 percent of domestic sales
June 17, 2005
Foreign-invested firms have been enhancing their contribution to the Korean economy, especially in such sectors as sales and exports, the Ministry of Commerce, Industry and Energy (MOCIE) said on May 25.
In a recent survey of 1,195 companies with foreign shareholdings in excess of 10 percent, the ministry found their sales amounted to 11.5 trillion won in 2003, 11.6 percent of the nation's total sales for that year.
Given the contribution to sales in the manufacturing sector, the ratio went up to 13.7 percent, up from 13 percent in 2000.
When it comes to foreign companies' contribution to job creation, the survey showed the portion of jobs provided by foreign companies was 6.6 percent in 2003, down from 7.3 percent in 2000.
The trade balance of foreign companies posted a surplus of $3.2 billion in 2003, from $500 million in 2000. The amount took 21 percent of the nation's total trade surplus in that year.
Top four industries where exports by foreign companies in Korea exceeded imports are electronics, chemicals, automobile and general machinery.
"The survey proved foreign companies have taken root in the Korean economy as a key contributor since 1998 when the government dramatically simplified procedures to attract foreign direct investment (FDI), following the enforcement of the Foreign Investment Promotion Act in 1998," the ministry said.
Comparing local and foreign companies in terms of labor productivity, the productivity of foreign companies was 25 percent higher than their domestic counterparts.
"The difference in labor productivity is attributed to the capital-driven management structure of foreign companies in Korea," the ministry said.
Foreign companies also outperformed local firms in terms of profit on ordinary activities.
As of 2004, the number of foreign-invested companies was 16,181. FDI rose 97.4 percent to $12.77 billion in 2004 over 2003.
The combined FDI since 1962, the year Korea officially began attracting FDI, exceeded $100 billion in October last year for the first time.