Foreign investment down sharply in Q1: official

By Lee Joon-seung
SEOUL, March 23 (Yonhap) -- Inbound foreign direct investment (FDI) dropped 44
percent on-year in the first quarter due to the global economic slump that has
sapped most business sectors, a senior government official said Monday.

Vice Knowledge Economy Minister Kim Young-hak said figures for the first three
months may hover around US$1.5 billion, down sharply from $2.7 billion tallied
for the same period in 2008.
"The drop can be attributed to the lack of any mergers and acquisition deals and
large investment going to the United States," the official said. Most funds that
are to arrive this year are follow-up investments for existing local operations,
with very few fresh arrivals, he added without elaborating further.
Kim pointed out that while bargain-hunting investment flowed into the country
following the 1997-98 Asian financial crisis, global funds are currently seeking
cheap purchases in the United States.
He, however, said that not counting the inflow of funds into the financial and
insurance sectors, which reached $1.2 billion in the first quarter of last year,
the total is not a serious drop.
"Excluding financial sector investment the inflow remains relatively stable," the
vice minister said.
Seoul is actively seeking FDI to help make up for sluggish local corporate
investment. Business investment is important because it can fuel growth and
create more jobs. The country is expected to post negative 2 percent growth this
year from 2.5 percent gains reported for 2008.
Earlier in the year, the government said it may be able to attract up to $12.5
billion in FDI for 2009, up from $11.7 billion estimated for the previous year.
Officials, have since said that reaching the target may be hard as businesses
around the world cut back on spending.
yonngong@yna.co.kr
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