Loosening the Restrictions of Business Debt Ratio in a Large Scale

Kang, Woontae, Head of Policy Planning and Coordination Committee 2 of the Millennium Democratic Party (MDP), said on August 6, ``There are 36 – 37 percent of the companies in stock market, whose interest compensation ratios, which indicate the capability of paying interests with earned business profits, are greater than 3. For such companies, there is no necessity to apply the same 200 percent restrictions in terms of debt ratio.``

After the meeting among supreme council members and economy-related ministers, he said, ``Such point was emphasized to government several times and they are leaning toward supporting the idea.``

He added, ``As of now, not only a group of 64 companies under the 200 percent debt ratio restriction, but also smaller companies that are judged by individual banks are suffering from this restriction.``

At the meeting, the government and ruling party agreed on the view points that the center of the business restructuring should be moved to profitability and future value creation from the integrity and transparency and that the 200 percent debt ratio, which had been regarded as a stumbling block for investments among businesses, should be loosened.

Yoon Jong-Koo jkmas@donga.com