Last year, Korea’s outward foreign direct investment (FDI) exceeded USD 70 billion, returning to growth for the first time in three years. The increase in overseas investment is seen as the result of a combination of expectations of interest rate cuts, a recovery in global stock markets, and capital movements aimed at reducing tax burdens.

According to the “2025 Foreign Direct Investment Trends” released by the Ministry of Strategy and Finance on the 27th, Korea’s outward FDI in the previous year amounted to USD 71.88 billion (about KRW 108.6 trillion), an 8.7% increase from the year before (USD 66.13 billion). After hitting a record annual high of USD 83.48 billion in 2022 and then declining for two consecutive years, the figure rebounded for the first time in three years.

An official at the ministry stated, “The expansion of investment in response to changes in the global political landscape, along with shifts in international financial market trends such as an interest rate cut stance and strong performance in global stock markets, have acted in combination.”

By country, the United States (USD 25.27 billion) was the largest investment destination. This represented a 12.9% increase from the previous year and accounted for 35.2% of total outward investment. While manufacturing investment remained at roughly the same level as the previous year, investment in the finance and insurance sectors increased, turning to growth for the first time since 2022.

Investment in the Cayman Islands and Luxembourg, both regarded as major tax havens, also rose significantly. Investment in the Cayman Islands reached USD 8.44 billion last year, while Luxembourg recorded USD 6.34 billion, increases of 23.5% and 2.9% year-on-year, respectively. Combined investment in the two jurisdictions totaled USD 14.78 billion, up 13.8% from the previous year (USD 12.99 billion). This is 5.1 percentage points higher than the overall growth rate of outward FDI.

The Cayman Islands, which exempts corporate tax as well as gift and inheritance taxes, serves as a key tax haven and financial hub through which global capital is routed. Luxembourg also offers various tax incentives to multinational corporations and functions as an investment base within Europe. The expansion of investment into these jurisdictions is widely viewed as being driven more by capital movements aimed at reducing tax burdens and boosting investment returns than by real-economy investment.

The ministry official said, “As global supply chains and the international trade order are being restructured, we are closely monitoring trends and conditions in outward foreign direct investment,” adding, “We will continue to identify and address difficulties faced by Korean companies expanding overseas so that they can conduct stable business operations, and we will strengthen communication and cooperation with major investment destination countries and institutions.”

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