By Jane Han
Staff Reporter
The latest foreign direct investment (FDI) statistics by a United Nations agency showed Wednesday that South Korea's ranking in terms of total volume attracted dipped sharply, which experts attribute to the current administration's stiff regulations, anti-corporate atmosphere and pro-union measures.
Based on the FDI index, which measures the overall business environment and economic infrastructures of about 200 countries worldwide by the United Nations Conference on Trade and Development (UNCTAD), the country stood at 27th place in 2005. But the figure dropped to 47th in 2006. From $7.5 billion in 2005, it ended attracting just $4.95 billion last year.
The figures that prospective investors refer to, however, ranked Korea's FDI potential at 17th place, while the U.S. came in first, followed by Singapore and Britain.
Factors such as actual economic growth, per capita gross domestic product, export volume, general living and technology standards, research and development spending, educational standards and country risks are calculated for the ratings.
``The index shows that the net inflow dropped, but the FDI potential figure is still kept the same, which is useful information for foreign investors,'' said Kim Pil-goo, head of the investment policy team at the Ministry of Commerce, Industry and Energy.
The net inflow declined last year, Kim said, due to major foreign retail giants such as Carrefour and Wal-mart selling off their holdings in the country.
As the net inflow is the sum of all money subtracted by funds that were sent abroad after liquidations of assets and the selling of stocks, he said such measures have a direct effect on the figure.
Economic analysts have been blaming the Roh Moo-hyun administration for its anti-foreign investment rules dogging businesses wanting to spend in Korea.
``But with the presidential elections ahead in a few months, that will give a general push to overall FDI rankings,'' said an analyst at Good Morning Shinhan Securities.