Foreign direct investment in S. Korea up sharply in Q3

(ATTN: UPDATES with mored details, comments from para 5)
By Lee Joon-seung
SEOUL, Oct. 1 (Yonhap) -- Foreign direct investment (FDI) into South Korea surged
17.4 percent on-year in the third quarter due to state-led economic stimulus
measures and favorable exchange rates, a government report said Thursday.
South Korea attracted US$3.37 billion in future FDI in the July-September period,
compared to $2.87 billion a year earlier, according to the preliminary report by
the Ministry of Knowledge Economy.
While investment plunged in the first quarter as businesses reeled from the
global financial crisis, the passage of a 28.4 trillion won (US$24.1 billion)
supplementary budget in late April helped attract overseas interest, the ministry
said.
The money is being spent to build up the country's eco-friendly "green growth"
industries and to create jobs that can spur consumption and production.
The depreciation of the Korean won vis-a-vis the U.S. dollar, along with overseas
expectations that the local economy is making a faster than expected comeback,
also fueled inbound investments, the report said.
The Korean currency stood at an average 1,062.6 won to the greenback in the third
quarter of 2008, but has since fallen an average of 1,240.9 won to the dollar in
the last three months.
The country's industrial and service sector productivity all posted positive
growth in July.
"The increase in investment marks the second quarter in a row that numbers have
moved up compared to the year before, with the total pledged by foreign investors
from January through September reaching $8.02 billion for a 8.1 percent on-year
gain," said Park Soon-kee, head of the ministry's investment policy division.
Park called gain especially noteworthy considering FDI to countries like the
United States, France, Japan, Taiwan and China all tumbled into negative
territory this year.
FDI to the United States shrank 68.8 percent on-year in the first half, while
overseas investment in Japan and China dropped 56.5 percent and 17.5 percent,
respectively.
The official added that while it may not be easy, there is a chance that South
Korea may be able to attract $12.5 billion worth of overseas investment by year's
end.
The ministry, in charge of the country's industrial and investment-related
policies, said FDI in the third quarter was centered mainly in the distribution
sector and business services, which range from software development to
consulting. Money also poured into electronics, power and real estate.
Of the total FDI in the cited period, funds flowing into the service sector
jumped 32.5 percent, while FDI into manufacturing was down 13.1 percent.
Investments for mergers and acquisitions jumped 67.5 percent annually to $16
million, while those earmarked to set up new businesses gained 5.2 percent
compared to the year before.
Funds from the European Union jumped 47.2 percent compared to the previous year,
while those from Japan soared 161.9 percent. FDI from the United States declined
44.5 percent on-year.
Noticeable investment deals reached in the third quarter were a $700 million
agreement by eBay to takeover Gmarket Inc., South Korea's largest on-line
marketplace, and a $250 million arrangement pledged by Bosch of Germany to
jointly enter into auto parts manufacturing with Samsung SDI.
yonngong@yna.co.kr
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