Capital Investment

 

The Korea Finance Corporation conducted a survey on 3,064 Korean companies’ capital investment for this year and the next between Oct. 28 and Nov. 28, and announced on Dec. 9 that their combined capital investment is estimated to reach 130.5395 trillion won (US$117.8746 billion) by the end of this year. The amount is 0.2 percent higher than last year’s, but 4.1 percent short of their previously planned amount of 136.0637 trillion won (US$122.9961 billion).

“This seems to be because the sinking of the Sewol Ferry in April, concerns over the slowdown of the Chinese economy, and lingering global economic uncertainties are hampering the recovery of their investment,” the corporation explained.

In particular, small and medium enterprises (SMEs) were found to be more inactive than larger corporations. The latter increased their capital expenditure by 1 trillion won (US$903 million) year-on-year, although they failed to meet the target. In contrast, the former’s expenditures were reduced by 700 billion won (US$632 million) or so.

In the meantime, the 3,064 companies are planning to make a capital investment of 134.37 trillion won (US$121.33 billion) in 2015. Major corporations are expected to increase their amount by 3.5 percent to 128.4396 trillion won (US$115.9784 billion), whereas SMEs are likely to cut theirs by 8.3 percent to 5.9304 trillion won (US$5.3550 billion). Of the respondents, 39.2 percent mentioned sluggish demand as the reason for their reluctance, followed by economic uncertainties (31.8 percent), financing difficulties (16.9 percent), and surplus capacity (9.3 percent).

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