FDI pledges fall 9.7% in first three quarters of 2017

New foreign direct investment pledged to South Korea in the first three quarters of this year declined due to military tension on the Korean Peninsula and rising protectionist practices by major trading partners, the government said Thursday.

South Korea received $13.59 billion worth of FDI commitments from January to September, retreating 9.7 percent from a year earlier, according to the Ministry of Trade, Industry and Energy.

The amount of actual investments made by foreign investors and companies, however, rose 9.1 percent on-year to $8 billion over the cited period, the ministry said.

New FDI pledges from South Korea's two largest trading partners -- the United States and China -- have diminished as both have increasingly taken protectionist measures.

The new investment pledge from the US decreased 5.5 percent on-year to $2.9 billion in the nine-month period, and that from China dropped 19.5 percent to $3.64 billion, the ministry said.

In contrast, FDI pledges from European Union countries jumped 22 percent over the cited period.

"The political and economic environment is not positive at home or abroad due to the rising geopolitical risk, protectionist trade practices and the possibility of an additional interest rate hike in the US," the ministry said in a release.

North Korea has conducted a series of nuclear and missile tests this year, which have drawn strong condemnation from the international community.

By industry, new FDI pledges in the country's manufacturing sector declined 3.5 percent on-year to $4.16 billion, and those in the service sector went down 8.8 percent to $9.38 billion.

The ministry said foreign investment is unlikely to make a turnaround in the fourth quarter because the US and European Union are rolling back quantitative easing and prospects for the Brexit talks remain uncertain. (Yonhap)