Foreign direct investment in S. Korea rises 9.1% in H1 on semiconductor inflows

Foreign direct investment in South Korea grew more than 9 percent in the first half of this year compared with the same period last year, despite the prolonged conflict in the Middle East.

The Ministry of Trade, Industry and Energy said Friday that FDI on a declared basis reached $14.28 billion in the January–June period, up 9.1 percent from a year earlier.

Arrived investment — the amount actually disbursed — came to $10.73 billion, a 42.6 percent increase from the same period.

The ministry said the sustained FDI growth, even as global investment has broadly contracted amid Middle East tensions including the US-Iran war, reflects solid confidence among foreign investors in South Korea's investment environment.

Fresh high-quality capital continued to flow into promising sectors such as semiconductors and displays.

A breakdown by investment type and sector showed diverging trends. Greenfield investment — the construction of new factories — fell 1.5 percent year-on-year to $10.82 billion, weighed down by rising global investment uncertainty.

Mergers and acquisitions investment, by contrast, jumped 64.3 percent to $3.46 billion. The service sector rose 27.9 percent to $9.07 billion, with capital concentrating in finance and insurance, up 47.9 percent, and real estate, up 98.8 percent.

Manufacturing fell 28.4 percent to $3.81 billion. Chemicals dropped 17.0 percent and electrical and electronics declined 26.5 percent, though investment in machinery, equipment and medical precision surged 243.1 percent as capital flowed into promising industries including autonomous driving robots and healthcare. Investment in non-metallic mineral products such as displays also rose 34.2 percent.

By country, investment from the United States fell 2.5 percent to $3.05 billion, while EU investment declined 8.1 percent to $2.05 billion.

Declared investment from Japan fell 30.9 percent to $1.49 billion and investment from China dropped 18.6 percent to $1.48 billion. Investment from other countries, including Singapore and the United Kingdom, jumped 65.4 percent, offsetting the declines.

A ministry official said the government plans to further strengthen incentives for foreign investors by linking them to national industrial policies such as the five-hub, three-special-zone initiative, and to step up strategic investor relations activities at home and abroad to sustain the FDI momentum built on last year's record performance.