Global Players from Emerging Markets: Strengthening ... - Unctad

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92 Outward Foreign Direct Investment by Small and Medium-sized Enterprises from Malaysia Company Industries Selected destination Website Press Metal Aluminium angles, ceiling tees China (http://www.pressmetal.com) Putera Capital Berhad/ International Commercial Bank SA Financial services Czech Republic, Hungary, Bosnia and Herzegovina, Albania, Ghana, United Republic of Tanzania and Mozambique Renong Hotel, Leisure Viet Nam Renong Cement India Renong Financial and educational services; oil and gas exploration Uzbekistan Royal Selangor Pewter Australia, United Kingdom, Canada, United States Sapura Telecommunication Viet Nam Samling Group Logging Cambodia (http://www.royalselangor.com) Sime-Darby Plantation Indonesia, Viet Nam (http://www.simenet.com/) Sime-Darby Palm oil refinery Egypt, United Republic of Tanzania, China and Tunisia Technology Resources Industries Bhd (TRI)/ Malaysian Helicopter Services Transportation Cambodia (http://www.simenet.com/) (http://www.simenet.com.hk/) Telekom Malaysia Telecommunication Guinea (http://www.tm.com.my) TRI-Cellular Telecommunication Cambodia Wah Seong Corp. Oil and Gas Australia (http://www.wahseong.com/) YTL Corp. Bhd. Power Indonesia (www.ytl.com.my) YTL Corp. Bhd Tourism development zone Cambodia (www.ytl.com.my) YTL e-Solutions Narrowcast advertising United Kingdom Sources: Company’s websites and various Malaysian newspapers.
CHAPTER VIII CHAPTER VIII 93 OUTWARD FOREIGN DIRECT INVESTMENT BY ENTERPRISES FROM THE REPUBLIC OF KOREA* A. Introduction Export has been the growth engine for the Korean economy. It has contributed to the country’s economic success. However, export was a development strategy appropriate at the initial stage of the country’s economic development. As the economy enters into a more developed stage, while continue exporting, it has to actively promote OFDI to maintain and enhance the competitiveness of its indigenous firms. Korean firms have to go abroad to compensate for labour cost disadvantage, to support trade channels, to access to natural resources and to acquire strategic assets such as technology. This paper explains the key drivers and motivations of Korean OFDI and their impact on firms’ competitiveness. It highlights the government policies relating to OFDI as they evolved over time and it proposes policy options for strengthening the internationalization of Korean enterprises through outward investment. B. OFDI from the Republic of Korea: Trends and development The Republic of Korea is an established outward investor among the Asian Newly Industrialized Economies. Its first OFDI took place as early as 1959 when a Korean company acquired real estate in New York, United States. 66 Up until the mid-1980s, Korean OFDI has been negligible and limited to mining, * * This This paper paper was was prepared prepared by by Hwy-Chang Hwy-Chang Moon, Professor of International International Business, Business, Graduate Graduate School School of of International International Studies, Studies, Seoul Seoul National National University, University, Republic Republ Republic ic of of Korea. Korea. 66 Korean OFDI in non-real estate activities began in 1968 when the Korea Southern Area Development Company invested in a project on development of Indonesia’s forestry. 93 forestry and trading businesses primarily in natural resources. Strict foreign exchange controls that existed at that time were a key deterrent. Since the mid-1980s, the Government liberalized regulations relating to OFDI, pushed by high domestic wages and land prices. The appreciation of the Korean currency, following the 1985 Plaza Accord, encouraged Korean companies to invest abroad to regain competitiveness. Most Korean OFDI during this period went to Southeast Asia, which offered market expansion opportunities and lower labour costs. Korean OFDI in the region since then has continuously increased except during the 1997-1998 Asian financial crisis. The Republic of Korea is among the top 10 emerging market investors. Its OFDI stock rose from $2.3 billion in 1990 to $34.5 billion in 2003 (figure 1). Korean OFDI, in terms of number of projects, increased dramatically from 614 in 1998 to 3,772 in 2004. 67 OFDI flows increased from $3,634 million in 2002 to $5,884 million in 2004, contributing to an increased total OFDI stock. Geographical distribution. The geographical distribution of Korean OFDI has changed over time. The North America region was the most preferred destination in the early 1990s. The attention was later refocused on Asia (figure 2). Investment in Asia, particularly to China, peaked to $3,324 million in 2004. Most of the labour intensive OFDI were in textile, clothing, shoes and toys. These industries relocated to China and the Southeast Asian countries because of the availability of low cost labour - the key pull factor. Most of the capital intensive OFDI such as in steel, automobile and electronics industries concentrated in Europe and North America. Sectoral distribution. Korean OFDI concentrated in manufacturing activities, which accounted for 56 per cent of total flows in 2004. About 64 per 67 See Korean Overseas Information Service (www.korea.net) .
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