By Sa Eun-young
Staff Reporter
South Korea’s outlook for foreign direct investments (FDI) in the next couple of years ``will remain well below the country's potential,” according to a recent global investment forecast. The U.K.-based Economist Intelligence Unit (EIU) placed the country at 31st among 82 countries in a report, ``World Investment Prospects to 2011,” released Wednesday.
The report was prepared in cooperation with the Columbia Program on International Investment, after conducting a survey of 600 investors world-wide.
The research organization estimated that Korea will attract an annual average of $7.2 billion over the next five years, accounting for 0.48 percent of total overseas investments around the world.
Korea’s FDI inflows hit $9.2 billion in 2004, boosted by several high-profile deals, but then the figure dropped to $3.6 billion in 2006. Despite the sharp fall last year, investments are expected to climb steadily each year to reach $9.7 billion in 2011.
The outlook for Korea’s inflow of investments, however, falls short of its potential, according to the EIU. Factors hindering FDI gains in the country include ``residual hostility toward foreign ownership, continued lack of corporate transparency and persistent labor militancy,’’ the report said.
It also mentioned that North Korea ``will continue to cast a long shadow’’ over the country’s economy as the communist regime’s unpredictability leaves open the possibility for escalation of tensions. Still, Korean firms ``stand to benefit from rapprochement, particularly if they are allowed greater access to North Korea’s cheap and disciplined workforce,” the EIU said.
The United States remained the top most attractive spot for foreign investment with an estimated amount of $250.9 billion, followed by the United Kingdom with $112.9 billion and China with an estimated $86.8 billion.
Korea also fell behind other Asian nations in the global outlook as Hong Kong, Singapore, India, Japan and Thailand all placed higher.
In global business environment rankings, Korea maintained its position from five years earlier, placing 25th among 82 countries. It received 7.56 points out of 10.