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Investment News

2019.09.23
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Foreign investment in parts and materials grew 41 times in 18 years


According to Yonhap News,

(SEOUL=Yonhap News) In the amidst of efforts to secure core technologies as a response to Japan's exports curbs, it was reported that investment and entry to the Korean market by foreign materials and parts companies have risen 41 times over the past 18 years.

However, the share of investment by Japanese companies turned out to be the largest, calling for diversification of investing countries.

On September 19, the Ministry of Industry, Trade and Energy (MOTIE) said that foreign investment (as declared) since 2001- when government began implementing policies regarding parts and materials in earnest including enactment of the Act on Special Measures to Promote Materials and Parts-jumped from USD 1.4 billion in 2001 to USD 59.3 billion (accumulative), growing 41 times.

The share of parts and materials investment out of foreign investment in the manufacturing sector was less than 50 percent in 2001, but climbed up to about 70 percent, contributing to expansion of Korea's exports and global market share.

As of last year, there were 3,423 manufacturing companies out of total 14,068 foreign invested companies. Of them, 2,573 companies were found to be in the parts and materials sector.

The exports of materials and parts grew more than five times, from USD 62 billion in 2001 to USD 316.2 billion in 2018. The share in the global parts and materials markets also expanded from 2.9 percent (ranked 13th in the world) in 2001 to 4.8 percent (ranked 6th in the world) in 2017.

In particular, foreign investment in parts and materials is found to be closely related with Korea's industrial development.

When it comes to accumulative investment amount by sector of the parts and materials industries, electronics parts recorded USD 14.4 billion (24.2%), chemical products USD 11.9 billion (20.1%), automobiles USD 7.1 billion (12.0%), and other machines USD 6.6 billion (11.1%), showing similar composition to Korea's major export products.

However, it was also found out that Japan takes up the largest share of foreign investment in the materials and parts industries. Looking into the share of foreign investment in the parts and materials industries in 2001-2018 by country, it is revealed that Japan (27.0%) outranked other countries such as the U.S. (13.0%), Netherlands (9.6%), Germany (7.7%) and Singapore (5.1%). Russia, which has been recently talked about as a potential investor, was not seen (0%) at all.

It is different from the list of major foreign investing countries in general, topped by the U.S. (22.3%), followed by Japan (12.6%), Netherlands (8%), Singapore (6.3%), and the U.K. (5.7%) during the same period, in which accumulative foreign direct investment reached USD 264.8 billion.

Against this backdrop, there have been efforts to diversify foreign investment in the parts and materials industries, which tended to be reliant on Japan, and intensively attract investment in high-tech components such as nano, polymer, and semiconductor materials.

An official from MOTIE said, "Foreign investment in the parts and materials industries is vital not only for national economy encompassing exports and employment, but also for stable supply throughout the value chain of domestic industry," stressing the need to attract foreign investment.



sungjin@yna.co.kr


Copyrights Yonhap News. All Rights Reserved.
Reprint or redistribution without permission is prohibited.


Source Text


Source: Yonhap News (September 19, 2019)

** This article was translated from Korean.

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Seoul goes on international road show to diversify Korea’s IT supply chain
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