South Korea attracted $2.87 billion in investment from overseas in the third quarter of the year, down 2.6 percent from $2.95 billion a year earlier, with the ongoing international financial market turmoil hitting investment sentiment hard worldwide.

Foreign direct investment (FDI) into Korea fell for the first time in six quarters since the second quarter of 2007, according to the Ministry of Knowledge Economy Thursday. But the number of FDI cases rose 6.3 percent to 979 during the July to September period from a year ago, meaning that the size of each investment shrank.

Large inbound investment projects worth over $100 million each totaled $1.32 billion, down 7.2 percent, while FDI cases worth less than $100 million each rose 1.6 percent to $1.55 billion.

“International investors and businesses put less money into Korea in recent months as business conditions have worsened on credit shortage and a global economic slowdown. It will be more difficult for us to draw investment from outside for the time being as the U.S. financial market debacle will likely prolong and spread to a broader economy,” a ministry official said.

He said the ministry plans to hold a series of promotions in the Middle Eastern countries, instead of the U.S. and other advanced economies, this month to attract oil money.

The financial and insurance sector saw inbound FDI decrease 29.2 percent in the third quarter from a year earlier as a result of the global financial market debacle, while manufacturers attracted 8.5 percent more. Greenfield-type foreign investments, including the construction of plants, increased 4 percent to $1.91 billion, while merger and acquisition (M&A) FDI fell 13.7 percent to $960 million.

By country, the United States invested $250 million in Korea from July to September, down 57 percent from a year earlier. But investment from Japan expanded 25.6 percent to $230 million, while European nations brought $1.44 billion to Korea, up 9.3 percent from the previous year.

The United Nations Conference on Trade and Development (UNCTAD) reported recently that foreign direct investment into Korea reached $2.63 billion last year, down 46 percent from $4.88 billion in 2006, falling for the third consecutive year. Its global ranking also dropped 13 notches to 60th during the one-year period.

Source – Korea Times