Since the establishment of a new democratic goverment under former President Mandela in April 1994, South Africa has been experiencing political stability and economic revival as newer before. Despite major political and economic restructuring, the economy performed well and is one of a few economies that showed positive real growth for the last 12 years.

More and more foreign companies are setting up branch offices, manufacturing plants and other business operations in South Africa. Major investors include countries such as Germany, the UK, the USA and France as well as an increasing number of Middle Eastern and Asian nations such as Japan, China, Malaysia, Indonesia, Singapore, Thailand and Korea.

Korean investment in South Africa is in total approximately R 5,8 bn. Sectors attrackting Korean investment are varied and include, amongst others, the manufacture of audio equipment, stainless steel, auto components, nuts and bolts, building material as well as leather garments and footwear.

Perhaps the best testimony of the increasing Korean interest in South Africa in recent years and a sign that further Korean investments will follow in future has been the establishment in South Africa of branch offices by several Korean conglomerates , for example LG, Samsung, Hyundai and SK.

The Korea Trade Promotion Corporation (KOTRA) established an office in Johannesburg during June 1992.

Since South Africa has abundant natural resources and supplies of raw materials, a number of industries present especially good opportunities for investment and value added production such as aluminium and stainless steel products, iron and steel products, chemical products, automotive parts, agro-processing, textile (wool, cotton and mohair), clothing products as well as timber related products.

Besides offering a first world infrastructure and low-cost manufacturing base, an important factor favouring investment in South Africa today is the uniquely attractive, multi-layered investment incentive package offered to foreign investors by the central government, the provincial and city governments as well as the Industrial Development Corporation of South Africa.

The South African government’s new economic development policies aim to promote industrial development and investment in the manufacturing sector by providing increased support for enterprises and by lowering the tariff structure generally. To date the South African Government has, in fact, moved ahead its WTO commitments in reducing import duties below the agreed levels in certain sectors.

The South African government introduced attractive incentives to encourage new investment in South Africa's manufacturing sector such as:

  Small, medium enterprise development programme (SMEDP)
  Skills support programme (SSP)
  Foreign investment grant (FIG)
  Critical infrastructure fund (CIF)

An important step in the process of encouraging investment in South Africa was taken in the 2003/4 budget, when the basic corporate tax rate was reduced to 30%. A further important development was the removal of exchange control for non-residents. Foreign investors can now freely transfer capital; dividends and profits into and out of South Africa and taxes are no longer levied on dividends and interest paid.

The province-based Investment Promotion Agencies take foreign investors by the hand and provide a total industrial financing and support service to help investors through all the processes of establishing a business enterprise or manufacturing facility in South Africa.

New industrial investment in South Africa is being attracted increasingly from investors in Korea because of several factors. These are:

  A strong and stable government supportive of a market economy and foreign investment
  A strong well-diversified economy widely recognized as the ”Economic Powerhouse” of Africa
  A strategic location at the southern tip of Africa providing easy access to the large sub-Saharan market
   of 250 million people as well as to, for example, South America and the Indian Ocean Rim countries
  A rapidly expanding domestic market of 45 million people
  A first world infrastructure with extensive transport, electricity & telecommunication networks and
   a highly advanced commercial and banking sector
  Convenient time zone location - easy access to American and Eastern Markets
  Access to the markets of the USA, Europe and Africa through free trade agreements and trade arrangements
  World’s cheapest supply of electricity

The increasingly friendly relations between SA & Korea, the existence of an established Korean community in South Africa and the high quality of life offered in the South Africa are also all positive factors which can be expected to encourage increased Korean foreign direct investment in South Africa in future.