Overseas direct investment by South Korean small and medium enterprises lagged far behind that of big companies in 2012 as they were reluctant to invest due to worsening profitability, a research institute said Thursday.

The Korea Eximbank Overseas Economic Research Institute said local SMEs invested a combined $3.6 billion in foreign countries last year, or a mere 18.9 percent of the $19 billion overseas direct investment made by large companies.

The ratio reached 58.2 percent in 2005 but it began to tumble in the wake of the 2008 global financial crisis, according to the institute.

South Korean SMEs have cut their direct investment in foreign countries following the global financial crisis, but large companies have steadily increased their overseas investment, the institute said.

“Large companies have continued to find investment opportunities overseas despite the financial crisis, but small and medium firms withdrew from foreign countries due to worsening profitability,” said Kim Yu-sin, an official of the institute.

The annual amount of overseas direct investment by large South Korean companies averaged $77.1 billion between 2009 and 2012, up a whopping 81.9 percent from the average of $42.3 billion between 2005 and 2008.

In contrast, the annual average for SMEs declined to $14.9 billion from $17.2 billion over the cited period, it added.

Lee Bu-hyeong, an economist at the Hyundai Research Institute, a private think tank, said smaller firms’ overseas direct investment is unlikely to recover as they are struggling to turn a profit at home.

(Yonhap News)