SEOUL: Last week, the Korean government announced plans to attract more foreign direct investment by more than 50 percent in three years by easing regulations and focusing support on five sectors, including cosmetics and pharmaceuticals.
The Ministry of Trade, Industry and Energy said in a statement that industrial materials, petroleum products and food processing sectors would also be given strong support through regulatory changes.
Korea received FDI pledges totaling $19 billion last year, up sharply from $14.5 billion in 2013, and now aims to increase the amount to $30 billion in 2017.
Despite the sharp rise in pledges last year, South Korea still ranks low among high-income countries in the accumulated amount of FDI compared to the size of its economy.
Moreover, according to Industry Ministry data released on April 29, the total amount of reported FDI dropped 29.8 percent in the first quarter of this year to $3.55 billion compared to last year. On an arrival basis, the amount fell by 16.4 percent to $3.15 billion.
According to the UNCTAD 2014 World Investment Report, South Korea ranks No. 7 among the most attractive countries of South and East Asia for transnational companies.
South Korea’s appeal in terms of FDI is the result of the country’s fast economic development and the specialization of its industries in new information and communication technologies. However, the lack of general transparency in regulations continues to be a major concern for foreign investors. Despite the best intentions of the government, foreign investors remain dissatisfied with the ground situation and feel that there is room for improvement if Korea is to raise its competitiveness.
Therefore, it is interesting to see how foreign investment policies have changed over the years.
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