An Investment in Korea Is an Investment in the Future

New opportunities amid the global economic downturn

The U.S.-sparked financial crisis has affected the global economy, as it not only causes instability in financial markets, but also rapidly spreads to the real economy. To illustrate, it is expected that Korea's economic growth will also slow down this year, with a number of economic indicators including exports, domestic demand and employment signaling a sluggish economy. These prospects warn of another severe economic slump, the first since the Asian financial crisis in the late 1990s.
It has become evident that the global economic crisis and deterioration of global companies' profitability will affect their cross-border investments. Data released by UNCTAD showed that global FDI recorded $1.6 trillion for 2008, a 10-percent decrease compared to 2007. The results of the World Investment Prospects Survey on executives of major global companies also indicate that the economic crisis has had a negative affect on their decisions to expand their business operations in overseas markets.
However, it is undeniably true that we all are experiencing the transition period from crisis to opportunity. The one who successfully overcomes crisis will be the winner after this recession. Recognizing this, most economies including the U.S., Japan and EU consider 'green industries' as a jump starter for the unprecedented global economic recession and are trying to expand investment to these rather nascent industries such as developing renewable energy sources, fuel cell cars and energy-saving buildings, etc.
In the context that many countries are rushing to the 'green industries,' there would be a fierce competition not only for sourcing new energy or achieving economic growth, but also for overcoming this severe recession and gaining from it. Considering this, a certain level of technology, highly educated labor forces, appropriate government policy with a strong will and financial support are crucial for economic recovery and the success of business. In addition to that, the crisis management ability of the government should not be overlooked especially in this global recession period.

Why invest in Korea?
The Korean government has pursued measures to nurture 'new growth engine industries' since the beginning of 2008. This blueprint comprising 17 selected business areas such as telecommunications, robotics and global health care industries is set to employ cutting-edge technologies as new engines of growth. In line with this effort, the government is in the process of forming a 'new growth engine fund,' contributing 60 billion won ($40 million) this year to cultivate competent companies in the aforementioned areas and stimulate them to go global.
The Korean government's progressive approach toward 'low carbon, green growth' policies also gives out a positive signal around the world on its will to find a breakthrough in the current recession. The Korean Green New Deal plan will focus on creating 900,000 jobs over the next four years. This $40 billion plan, comprising projects such as developing renewable energy sources, supporting research into fuel-cell cars, and providing energy-saving homes, offices and schools is expected to promote backward and forward linkage industries.
One of Korea's primary strengths is that it holds a well-developed industrial base. In terms of production, Korea occupies the top spot in the shipbuilding and display sectors, the second in the global mobile phone market, third in overall semiconductors and fifth in the automotive, steel and petrochemical industries. Such a solid industrial foundation backed by a world-class IT infrastructure makes Korea the ideal test bed for new products and technologies of global multinational companies. The fact that the Korean people have earned a reputation as early adopters provides global enterprises with further motivation to choose Korea.
In addition, Korea's SMEs and venture businesses are eager to forge technological and capital partnerships with foreign companies. They have sharpened their technological edge in advanced IT industries and the growing BT sector. These enterprises have sufficient potential to develop new technologies and products in collaboration with foreign companies. With that, they could leap forward by widening their business scopes to neighboring nations including China, Japan and those in Southeast Asia.
This economic crisis situation is nothing new to Korea. Toward the end of 1997, Korea came close to experiencing national bankruptcy due to the near depletion of its foreign exchange reserves. The Korean economy registered a growth rate of -6.9 percent at that time. The Korean economy, however, was able to achieve a rapid recovery and 9.5 percent economic growth in 1999 after taking decisive restructuring measures on companies and the financial sector. Its reaction to the Asian financial crisis and how it manifested itself clearly showed the nation's potential to convert crisis into an opportunity.

Create synergies between Korea and foreign companies
With the advantages as noted above, Korea would become fertile soil that could grow new industries such as renewable energy, biotechnology, information & telecommunications, nanotechnology, etc.
On top of this, FDI with capital and/or technology will be the excellent seeds for Korea's growth. Through harnessing well-balanced industries, skilled labor and the government's support in Korean R&D, foreign investors could strengthen their competitiveness in the global market. Consequently, Korea is a new destination for foreign capital because it's a land of opportunity that promises maximum profitability. So, why not invest in Korea? nw

By Nam Ki-man Director General of the Foreign Investor Support Office, Invest KOREA