Amid a broadly subdued global investment climate, foreign direct investment in Korea in the first quarter ranked as the second highest on record. Steady inflows of foreign capital centered on advanced industries such as semiconductors and secondary batteries underpinned the gains.
The Ministry of Trade, Industry and Resources said on the 3rd that reported foreign direct investment (FDI) in the first quarter rose 0.1% from a year earlier to $6.41 billion. That is the second-highest on record. Actual arrivals, which reflect funds that have come in, reached $7.14 billion, the highest ever.
The Ministry of Trade and Industry (MOTI) said FDI maintained its growth trend despite successive unexpected risks, including geopolitical tensions, policy uncertainty, and conflict in the Middle East. It noted that strong investments continue in promising areas such as advanced manufacturing, including semiconductors and secondary batteries, as well as artificial intelligence (AI) data centers and offshore wind, sustaining last year's record performance of $36.05 billion.
By type of report, greenfield investment fell 19.8% from a year earlier to $3.74 billion amid heightened global uncertainty. In contrast, mergers and acquisitions (M&A) investment rose 53.4% to $2.67 billion. The increase in M&A is attributed to expanded strategic investments in which foreign corporations acquired equity in or merged with domestic corporations in key industries such as semiconductors and batteries.
By industry, services rose 21.5% to $4.33 billion, the largest first-quarter performance on record. Finance and insurance ($2.62 billion, +21.2%), distribution ($570 million, +43.0%), and information and communications ($240 million, +183.6%) led the gains. Manufacturing, however, slipped 47.6% to $1.24 billion as investment declined in electrical and electronics and machinery and equipment.
By country, the United States rose 20.9% to $1 billion, led by information and communications, chemicals, and distribution. The European Union, by contrast, fell 4.1% to $1.43 billion; Japan plunged 71.1% to $350 million; and China decreased 19.4% to $270 million.
An official at the Ministry of Trade and Industry (MOTI) said the government will proactively attract investment focused on strategic sectors to respond to external uncertainty and will continue improving the foreign investment environment by strengthening regional investment incentives and addressing difficulties faced by foreign-invested corporations.