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Foreign direct investment in Korea is decreasing sharply. Net FDI in Korea, which is the amount of FDI that came into Korea minus the amount of FDI that left the country, dropped from US$9.25 billion in 2004 to $6.31 billion in 2005, $3.59 billion in 2006 and $1.58 billion in 2007, marking three straight years of decline.
During the first three months of this year in particular, the amount of FDI that left Korea was $670 million, higher than the amount that came in. In other words, the amount of money foreign companies withdrew from Korea as they pulled out of the country outnumbered the amount of money they invested here. This shows that multinational companies are branding Korea as a country unfit for investment. Included in every survey of foreign businesses in Korea are complaints about troublesome labor unions, excessive government regulations, expensive housing and living costs and problems finding schools for children.
According to the latest figures compiled by the Organization for Economic Cooperation and Development, Korea was the only country among the 30 member nations of the OECD to see FDI shrink for the past three years until 2007. Korea's ranking in terms of FDI fell from 16th place in 2004 to 23rd in 2005, 28th in 2006 and 29th in 2007, which is almost at the bottom.
None of the BRICs countries -- Brazil, Russia, India and China -- or ASEAN member nations, such as Malaysia, Indonesia and Vietnam, saw FDI drop between 2004 and 2007. Vietnam saw FDI rise more than eight-fold, from $2.1 billion to $17.9 billion over that period, while India saw a six-fold rise in FDI, from $2.6 billion to $15.7 billion. Most of those countries saw FDI double or triple. In the global war to attract FDI, Korea is the only country to regress and fall.
Nowadays, not only is it tough to get foreign businesses to invest in Korea, but those that have been here are packing up and leaving. Over the past few years, we have been seeing a continuation of foreign businesses withdrawing their investments in Korea. Nokia transferred parts of its facilities in Masan, South Gyeongsang Province to China and India, while Motorola moved its plant in Icheon, Gyeonggi Province to China. Philips pulled its investments out of a joint venture with LG, while Wal-Mart and Carrefour sold all of their stores in Korea and left. The only place left for Korea and its workers, spurned by multinational companies, is economic slowdown and rising unemployment.
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