Major firms plan to raise spending to 122 trillion won: studyKorea’s top 30 conglomerates, including Samsung and Hyundai, plan to invest a total of 122.7 trillion won ($100.7 billion) in their businesses this year, though most are pessimistic about their growth, a survey by the Federation of Korean Industries (FKI) says.
Some 60 percent of respondents estimated they would spend a total of about 5.2 percent more than last year, according to the top business lobbying group.
Some 30 percent of businesses said they plan to reduce their spending, and another 10 percent plan to invest the same amount as last year.
Major portions of their investments will go to facilities. Facilities investment will be pumped up by 7.1 percent year on year to reach 90.9 trillion won, while spending on research and development will be up 0.1 percent from a year earlier to total 31.8 trillion won, the survey found.
The FKI announced last year that the companies plan to spend 125.9 trillion won, but the actual investments only reached 116.6 trillion won. However, the lobbying group said the companies will continue to expand their investments this year even though both local and global markets are slowing down in order to make some positive changes in the local market.
“Despite the weak economic situation, major enterprises will make bold facility investments in fields such as semiconductors, organic light-emitting diodes [OLED] and energy,” the FKI said in a press release on Wednesday.
For example, Samsung Group will invest a total of 15.6 trillion won to build a semiconductor facility in Pyeongtaek, Gyeonggi, by 2018. Hyundai Motor Group will spend 13.3 trillion won to develop environmentally friendly and smart cars by 2018.
SK Group has set aside over 13 trillion won to broaden its long-term evolution connection coverage and its semiconductor business. Lotte will spend 260 billion won to build a new brewery, and LG will invest 10 trillion won to expand its OLED manufacturing facilities.
Meanwhile, a total of 24 companies, or 80 percent of respondents, said their general business operating condition will worsen this year compared to last year. Seventy percent of those enterprises expect the loss to be limited, while 10 percent of them said they will face a sharp fall.
A full 56.7 percent of respondents said the economy will recover after 2018, and some 27 percent said it will get better in mid-2017. However, only one company answered that the economy will recover this year.
Thirty percent of the companies said they have difficulties with their poor exports data, and 20 percent complained about poor profitability. Another 20 percent said the interest rate and volatile currency were concerns.
About 20 local entrepreneurs attended Wednesday’s meeting, which was presided over by Joo Hyung-hwan, the minister of trade, industry and energy.
BY KIM YOUNG-NAM [email@example.com]