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In this page: FDI in Figures | What to consider if you invest in South Korea | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information


FDI in Figures

Global foreign direct investment (FDI) flows in 2021 were USD 1.58 trillion, up 64 per cent from the exceptionally low level in 2020. The recovery showed significant rebound momentum, with booming merger and acquisition (M&A) markets and rapid growth in international project finance because of loose financing conditions and major infrastructure stimulus packages. However, the global environment for international business and cross-border investment changed dramatically in 2022. The war in Ukraine – on top of the lingering effects of the pandemic – is causing a triple food, fuel and finance crisis in many countries around the world. Investor uncertainty could put significant downward pressure on global FDI in 2022. The 2021 growth momentum is unlikely to be sustained. Indeed, world flows in the second quarter of 2022, the latest data available, were down 31% from the first quarter and 7% less than the quarterly average of 2021 (UNCTAD Global Investment Trends Monitor, October 2022). The negative trend reflects a shift in investor sentiment due to the food, fuel and finance crises around the world, the Ukraine war, rising inflation and interest rates, and fears of a coming recession. Expectations for the full year are for a marked slowdown. In developing Asia, despite successive waves of COVID-19, FDI rose to an all-time high for the third consecutive year, reaching $619 billion. Asia is the largest recipient region, accounting for 40 per cent of global FDI. However, inflows remain highly concentrated; six economies account for more than 80 per cent of FDI to the region (UNCTAD, October 2022).

According to UNCTAD's 2022 World Investment Report, FDI to the Republic of Korea declined by 9% to USD 8.76 billion in 2020 from USD 9.63 billion in 2019, before reaching 16.82 billion USD in 2021. FDI stocks increased to USD 264.92 billion in 2020 and 263.25 billion in 2021, up from USD 135 billion in 2010. Although the country was among the first to contain the pandemic and economic growth remained strong, a sharp decline in cross-border M&As caused the drop in FDI. In 2020, M&A fell from USD 3.8 billion in 2019 to - USD 1.9 billion, driven by large disinvestments. Despite the overall decline, FDI inflows continued to be robust in some sectors in 2021, particularly in sectors related to artificial intelligence (AI), big data, cloud computing, as well as electric cars and biotechnology. Inflows of FDI pledged to these industries grew by 9.3% to USD 8.4 billion. According to data from OECD, Japan, the US, the Netherlands and the UK hold most of FDI stock. Investments have been mainly oriented towards manufacturing, finance and insurance, trade, hospitality, real estate, information and communication, and transportation.

In the first half of 2022 FDI inflows were already reaching 9.041 billion USD (OECD FDI In Figures, October 2022)

The country is ranked 16th on the AT Kearney Foreign Direct Investment Confidence Index 2022 on the most attractive economy for foreign investment. South Korea's appeal in terms of foreign direct investment is the result of the country's rapid economic development and the country’s specialisation in new information and communication technologies. However, the lack of general transparency in regulations remains a major concern for foreign investors. The World Bank esteems that the Republic of Korea is a country with a highly developed business environment.

The latest United NationAsia-Pacific Trade and Investment Trends Report provides additional information on FDI in South Korea in Asia-Pacific in 2022 and 2023.

Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 8,76522,06017,996
FDI Stock (million USD) 260,801280,085272,328
Number of Greenfield Investments* 83103116
Value of Greenfield Investments (million USD) 3,7104,96513,405

Source: UNCTAD, Latest data available.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.



Main Investing Countries 2019, in %
Japan 24.6
United States 16.0
Netherlands 9.2
Singapore 7.4
United Kingdom 7.1
Germany 4.1
Hong Kong 4.0
China 4.0
Main Invested Sectors 2019, in %
Manufacturing 36.8
Financial and insurance 30.3
Wholesale and retail trade 7.6
Accomodation and food service 6.8
Real estate 5.3
Information and communication 3.8

Source: OECD Statistics, Latest data available.

Form of Company Preferred By Foreign Investors
Limited Company
Form of Establishment Preferred By Foreign Investors
Greenfield investment (for manufacturing, this differs from other investments in new facilities, because it not only includes factory establishment but sales facilities as well).
Main Foreign Companies
Consult the successful stories of FDI on Invest Korea.
Sources of Statistics
Statistics from Invest Korea
Ministry of Commerce, Industry and Energy (MOCIE)
Korea National Statistical Office

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What to consider if you invest in South Korea

Strong Points

South Korea's strong points include:

  • Highly skilled workforce thanks to an efficient education system
  • Advanced R&D capabilities
  • Dominant position in high-end electronics
  • High quality infrastructure
  • Solid banking sector
  • Strong international financial position (currency reserves and low external debt)  
  • Growth of investment in Asia
  • Brand savvy consumers willing to spend on quality products
  • High level of disposable household income
  • Strong shipping and air cargo infrastructure
Weak Points

South Korea's weak points include:

  • Regulatory frameworks can be restrictive and opaque
  • Dominance of big industrial groups (chaebols)
  • Cost of manpower is comparatively high
  • Ageing population
  • Frequent contract negotiations throughout a business relationship are common
  • Property (leased or owned) is expensive
  • Unique industry standards
  • Dependence to raw materials imports  
  • Household indebtedness and high unemployment rate among young people
  • Regional tensions with North Korea and competition from China (steel, shipbuilding, electronics)
Government Measures to Motivate or Restrict FDI
The Foreign Investment Promotion Act was enacted to support and facilitate efforts to attract foreign investment. Most of FDI incentives offered by the Korean government are provided via:

  • Tax support (corporate tax and income tax reduction, acquisition tax and property tax reduction, exception from custom duties)
  • Cash grant (land purchase expense, lease expense, employment/education/training subsidy)
  • Industrial Site Support (location support, subsidy for difference of sale price, rent reduced-subsidized)

Nevertheless, some restrictions and interdictions exist in public administration, education, national defence, energy, media sectors.
For more information, visit the Invest Korea website.
The South Korean government significantly increased cash incentives for foreign companies to encourage more investment at home. In 2021, FDI flows to South Korea recorded a historical high of USD 29.51 billion.

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Protection of Foreign Investment

Bilateral Investment Conventions Signed By South Korea
Korea is a signatory to many conventions - a full list can be found at UNCTAD.
International Controversies Registered By UNCTAD
The ISDS Navigator contains information about known international arbitration cases initiated by investors against States pursuant to international investment agreements. The Republic of Korea is involved in 7 cases as Home State of claimant and in 7 cases as Respondent State.
Organizations Offering Their Assistance in Case of Disagreement
ICCWBO , International Court of Arbitration, International Chamber of Commerce
ICSID , International Center for Settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency
Korea is a member of MIGA.
The MIGA website gives a detailed description of all the guarantees it proposes.
Country Comparison For the Protection of Investors South Korea OECD United States Germany
Index of Transaction Transparency* 8.0 6.5 7.0 5.0
Index of Manager’s Responsibility** 6.0 5.3 9.0 5.0
Index of Shareholders’ Power*** 8.0 7.3 9.0 5.0

Source: The World Bank - Doing Business, Latest data available.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Acquisition of Holdings
Obligation to Declare

A foreign investment must be reported under the Foreign Investment Promotion Act (FIPA) or the Foreign Exchange Transaction Act. A fast registration process is available for foreign direct investment (FDI) under the FIPA. To apply, an FDI needs to:

  • invest at least KRW 100 million;
  • acquire at least 10% of voting shares of a Korean company, or own shares of a Korean company and dispatch or appoint an executive officer to or at such Korean company.
Competent Organisation For the Declaration
Invest Korea
Requests For Specific Authorisations
Most sectors of the economy are open to foreign investment, with the exception of a few key sectors, for example: telecommunications, broadcasting, publishing, banking, naval, aviation, agriculture, natural resources. In these sectors foreign ownership is limited to a percentage ceiling, or subject to regulatory approval for reasons of national security, protection of critical technologies, and so on.

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Office Real Estate and Land Ownership

Possible Temporary Solutions
There are several temporary solutions: Office in the president's private house, Office in the business centers, office rent in the privileged foreign investment area, etc.

Invest Korea Plaza (IKP) offers furnished office space and cutting edge conference facilities to foreign investors.

The Possibility of Buying Land and Industrial and Commercial Buildings
Ownership or occupation of real estate by foreigners is not restricted unless it threatens national security or public order. However, a foreign investor must obtain permission from the competent government authorities to purchase land located within an area of military facilities, a cultural property protection zone, an environmental conservation zone or a wildlife conservation zone.

Click here for Info on Foreigner's Land Acquisition Act.

Risk of Expropriation
Under the ROK law, the ownership of a foreign-invested enterprise is protected against expropriation or requisition. When private property is expropriated, it may only be taken for a public purpose and only in a non-discriminatory manner, and claimants are protected by a fair trial. Property owners are legally entitled to prompt compensation at fair market value. There are many cases of expropriation in the ROK, mainly for public reasons.

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Investment Aid

Forms of Aid

Most of FDI incentives offered by the Korean government are provided via:

  • Tax support (corporate tax and income tax reduction, acquisition tax and property tax reduction, exception from custom duties)
  • Cash grant (land purchase expense, lease expense, employment/education/training subsidy)
  • Industrial Site Support (location support, subsidy for difference of sale price, rent reduced-subsidized)
Privileged Domains
Industry support service, high-tech industry business, R&D service, manufacturing, tourist service, welfare facilities, etc.
Privileged Geographical Zones
Industrial complex located close to a port or an airport, making it convenient for businesses within to engage in foreign trade, international airport area, distribution complex or cargo terminals, etc.

Korean Free Economic Zones (KFEZs) aim to strengthen national competition for business and promote balanced regional development by enhancing living conditions and business environments for foreigners in South Korea. The KFEZs offer great incentives such as tax benefit, business support, deregulation, administration support and one-stop services for your successful business.

Free-trade zones
There are seven Free Economic Zones: Incheon FEZ, Busan-Jinhae FEZ, Gwangyang Bay Area FEZ, Yellow Sea FEZ, Daegu-Gyeongbuk FEZ, East Coast FEZ and Chungbuk FEZ.
For more information, click here.
Public aid and funding organisations
Ministry of Commerce, Industry and Energy (MOCIE), local governments.

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Investment Opportunities

The Key Sectors of the National Economy
Shipbuilding, semiconductors, automobile and automobile components, electronics (TV, mobile phone, etc), cosmetics, education services, defence industry, tv and music production (strong imports of Korean culture), textile.
High Potential Sectors
Aerospace, biotechnology, display, environmental industry, IT industry, logistics, nano-industry, cyber-security, new and renewable energy sources, R&D, real estate development, semiconductors, Smart Production, tourism, chemical, venture industry.
Privatization Programmes
Among the latest privatisations in South Korea are the state-owned banks such as the Korea Development Bank and Woori Bank, partially sold in December 2016. However, the government is currently at a standstill in an attempt to fully privatise Woori Financial Holdings because of the low price of its shares due to the increasing market volatility triggered by the COVID-19 pandemic. The privatisation of shipping company HMM is also scheduled for 2022.
Tenders, Projects and Public Procurement
Public Procurement Service, Tenders
DgMarket, Tenders Worldwide

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Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
Some sectors are totally closed to FDI:  

  • Nuclear energy
  • Broadcasting (TV and radio)

Other sectors have restrictions on FDI (from 25% to 49%)

  • Water and thermal energy
  • Newspaper publication
  • Telecommunication services  

Finally, in numerous sectors, FDI cannot exceed 50%. The government has the right to approve FDI in the domain of defence. 

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Finding Assistance For Further Information

Investment Aid Agency
Invest Korea
Korea Trade Investment Promotion Agency (KOTRA)
Other Useful Resources
Korean Free Economic Zones
Doing Business Guides
Doing business in South Korea (Thomson Reuters Practical Law)
Exporting to Korea (

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Latest Update: November 2023