Too Much Money
The cashable assets of the 10 major business groups in Korea increased by 56 percent during the past five years to a combined total of 149 trillion won.
According to market research firm CEO Score, the 76 subsidiaries of the 10 groups, excluding their financial arms and holding companies, had 148.52 trillion won (US$144.90 billion) in total cashable assets as of the end of the first quarter of this year. For reference, Korea’s total national budget for 2014 is approximately 358 trillion won (US$348.9 billion).
These companies’ cashable assets increased from 95.1 trillion won (US$92.8 billion) to 138 trillion won (US$134.5 billion) between 2009 and 2013. In particular, the amount surged by 10.5 trillion won (US$10.2 billion) in just three months this year. Their ratio of cash to total assets jumped from 11.9 percent to 13.6 percent during the same period, too.
The internal reserves, which are planned to be subject to taxation by the government, mean the cashable assets in a strict sense. Deputy Prime Minister for Economic Affairs Choi Kyung-hwan recently announced that he would impose taxes on internal reserves exceeding a certain ratio so as to drive the companies to make investments and pay dividends by using the assets.
It is the Samsung Group that has the largest amount of cash among the 10 chaebols. Its cashable assets skyrocketed from 27.5 trillion won (US$26.8 billion) to 66 trillion won (US$64.4 billion) between 2009 and 2013. 90 percent of the amount belongs to Samsung Electronics.
In the meantime, those of the Hyundai Motor Group increased from 21.9 trillion won (US$21.3 billion) to 42.8 trillion won (US$41.8 billion) during the period. Those of Samsung and Hyundai, which total at 108.8 trillion won (US$106.1 billion), surged by 120.3 percent compared to the end of 2009. The ratio went up as well from 51.9 percent to 73.3 percent.
Meanwhile, the other eight business groups recorded cashable assets of 39.7 trillion won (US$38.6 billion) in the first quarter, 13.2 percent down from five years earlier.