Nearly half of large firms in Korea without investment plan for next year

[Photo by Lee Seung-hwan]

About half of major companies in South Korea have not come up with investment plans for next year yet amid lingering economic uncertainty, a poll found Monday.

According to a survey commissioned by the Federation of Korean Industries (FKI) to Mono Research on top 500 Korean companies by sales, 49.5 percent of 101 responded companies said they have no investment plans or yet to decide on their investments for 2022.

Of the companies who said they have set an investment plan for next year, 62.7 percent said they will maintain the similar level of investment with this year. Around 31.4 percent said they will increase their investments, while 5.9 percent will cut back on spending.

The economic uncertainty was the most frequently cited reason for scaling back investment with a 31.8 percent vote, followed by excessive regulations with 7.6 percent and lack of investment incentives 1.5 percent.

Companies planning on increasing investments said they will spend more next year than this year to enhance business competitiveness (50.0 percent), groom new growth engines (25.0 percent), renovate aging facilities (12.4 percent) and capitalize on improved economic outlook (6.3 percent).

More than half of respondents, 58.4 percent, believed that the economy would keep up the current level of growth next year.

“Many negative factors including the spread of the Omicron variant, prolonged commodity price hikes and global supply disruptions have made it difficult for companies to increase investments for next year,” said Choo Gwang-ho, the head of the economic policy team at Korea Economic Research Institute (KERI) under the FKI.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]