Light and Darkness of Facility Investments Among Large Companies

The domestic large-companies plan to make facility investments of 13 trillion 870.6 billion won in total in the second half of this year.

The scale of the facility investments of this year totaled 27 trillion 831.8 billion won, up 5.2 percent from last year.

According to `the facility investment plan of the nation`s 200 largest companies`, a result of the survey of the largest 198 companies based on the total sales amount, conducted by the Ministry of Commerce, Industry and Energy (MCIE), the large companies invested 13 trillion 961.2 billion won in the first half of this year, decreased by 16.0 percent (2 trillion 651.9 billion won) from the original plan. The decline of the facility investments derived from the decline of the exports and the slowdown of the domestic economy with the slump of the world economy.

The MCIE plans to lower to 5 percent range the interest rates of the industrial foundation fund (currently 6-7 percent), the founding and the promotion funds for the small and medium companies, during the second half of this year.

The report prospected that the facility investments will increase 16.4-23.1 percent over the first half in the steel, metal, general machinery, and electronics parts industries. On the other hand, however, the semiconductor and the shipbuilding industries will decrease by 27.4-31.6 percent.

The semiconductor industry which occupies the largest portion (20.8 percent) of the total amount of the facility investments, invested 3 trillion 353.3 billion won in the first half, down 29.0 percent from the original plan, due to the worsened profitability and the blurred market prospect. And it plans to invest 2 trillion 433 billion won in the second half, decreased by 27.4 percent from the first half.

For the sources of the investment fund, while the supply of the fund through the direct finance such as the stocks and the corporate bonds decreased 26 percent year-to-year, the loans from the banks increased 53.3 percent.

And the internal fund use occupied the largest portion among the sources of the investment fund, 63.5 percent (17 trillion 679.8 billion won).

Kim Sang-Chul sckim007@donga.com