LEAD) Foreign investment in S. Korea dips 1.9 pct to US$11.4 bln in 2009

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SEOUL, Jan. 5 (Yonhap) -- South Korea's foreign direct investment (FDI) dipped
1.9 percent from a year earlier in 2009 as companies tightened spending amid an
overall slump in the global economy, a government report said Tuesday.

The Ministry of Knowledge Economy said foreign direct investment in South Korea
reached US$11.48 billion last year, marking the second straight year FDI topped
the $11 billion mark, as businesses and investors struggled to cope with the
financial crisis brought on by the collapse of Lehman Brothers Holding Inc.
According to the U.N. Conference on Trade and Development (UNCTAD), worldwide FDI
shrank from $1.7 trillion in 2008 to $1.2 trillion last year.
"Despite a slight decrease, South Korea did very well compared to other countries
whose inbound FDI contracted by around 40 percent," said Lee Dong-geun, a deputy
minister in charge of trade and investment promotion.
He attributed Seoul's better performance to the weak Korean won that made
investment cheaper, growth potential in the country's leading industries such as
electronics and forecasts that the economy will make a faster than expected
recovery.
The official also said that last year's figures were noteworthy because of the
increase in the "quality" of investments made.
"Fresh or 'greenfield' investments shot up 11.4 percent compared to the previous
year to $8.11 billion, with the total poured into the manufacturing sector
surging 23.9 percent," he said.
Manufacturing investments generally helps create more jobs and can strengthen the
overall industrial foundation of the country.
The latest report, meanwhile, said that FDI into the service sector contracted
9.5 percent annually $7.59 billion, with sharp cuts occurring in the financial
areas.
During the reported year, foreign direct investment from Japan and the United
States gained 35.9 percent and 11.9 percent, respectively, from a year ago to
$1.93 billion and $1.48 billion last year. But inbound investment from the
European Union fell 16.4 percent to $5.29 billion.
For 2010, the ministry said that Seoul wants to attract around $13 billion worth
of foreign direct investment, up 13.2 percent from 2009.
It said the increase is based on UNCTAD's forecast that global FDI volume will
rise 16.7 percent to $1.4 trillion in the new year, and predictions of the South
Korean economy growing by more than 5 percent during the new year.
yonngong@yna.co.kr
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