**Manufacturing Sector Including Electrical and Electronics**
**Investment Amount Increased by 21% Year-over-Year**
**Uncertainty in Favorable Trends This Year**
Foreign investment in South Korea’s manufacturing sectors like electrical, electronics, and precision industry saw a significant increase last year, setting a new record for Foreign Direct Investment (FDI). However, this year, uncertainties loom due to adverse conditions such as the change in U.S. political leadership and domestic political turmoil.
According to the Ministry of Trade, Industry and Energy on the 7th, the foreign direct investment (based on reports) for last year was $34.57 billion, a 5.7% increase from the previous year, achieving the highest figures once again following 2023.
When broken down by industry, the growth in investments in the manufacturing sector was particularly notable. The foreign investment in manufacturing reached $14.49 billion, a 21.6% increase from the previous year, driving the overall growth. Specifically, the sectors of electrical and electronics ($5.26 billion, 29.4% increase), machinery equipment and precision medical ($2.35 billion, 174.0%), and pharmaceuticals ($710 million, 113.2%) saw significant investment increases. Foreign investment in the service sector slightly increased by $17.83 billion (0.3%) compared to the previous year. Japan was the country with the highest investment in Korea last year, with an investment amount of $6.12 billion, a 375.6% increase from the previous year. China followed with $5.79 billion, representing a 266.1% increase. In contrast, investments from the U.S. and the European Union (EU) decreased to $5.24 billion (-14.6%) and $5.1 billion (-18.1%), respectively, due to the reversal of the base effect and a cautious mode amid political changes.
The issue is the outlook for attracting foreign investment this year. Despite achieving record levels last year amidst uncertainties like political changes such as the U.S. presidential election and ongoing geopolitical tensions, this year faces increased uncertainty with the inauguration of Donald Trump’s second administration and domestic political chaos. Industry Minister Ahn Duk-geun stated, “We plan to make all-out efforts to expand the attraction of high-quality foreign investments through strengthening advanced industry incentives and creating an investment environment that aligns with global standards.”