Korea Draws Largest Foreign Direct Investment in 3 Years

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Korea Draws Largest Foreign Direct Investment in 3 Years

 

October 21, 2004


Foreign direct investment to Korea during the first nine months surged to its highest figure in almost three years, helped by tax breaks, cash grants and other incentives offered by the government. FDI rose 71 percent from a year earlier to $3.4 billion, the biggest inflow since the fourth quarter of 2001, according to the Ministry of Commerce, Industry and Energy on October 6.

For the first nine months, investment jumped 82 percent to $8.4 billion, with the amount including General Electric Co.'s 1 trillion won ($870 million) purchase of Hyundai Capital Services Inc. and Sinochem Corp.'s 635.1 billion won acquisition of bankrupt Inchon Oil Refinery Co. "Recent state policies and a global upturn in foreign direct investment seem to have resulted in this growth," said Lee Tae-yong, director general of the Korea Trade-Investment Promotion Agency. "But more importantly, the government really pulled its weight to improve the corporate environment for multinational firms already doing business here. That's really the best kind of promotion."

The ministry forecasts that it will be able to attract more than $10 billion in foreign direct investment this year. The government believes greater foreign investment from abroad will play a major role in propelling the country's per capita gross domestic product to the desired $20,000.

In recent months, the Roh Moo-hyun administration has been stepping up efforts to attract investment from abroad to help stimulate the economy. To attract foreign investment, the government has introduced a series of incentives. Included in the package were tax breaks to foreign companies investing in domestic technology and services industries and lower income taxes for foreign employees. Financial support was also promised to overseas companies hiring Korean graduates from university science programs.

 

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