War in Iraq Over

As the U.S.-led war with Iraq is over, a lot of companies are regaining vitality and the government is preparing for reconstruction projects in Iraq. Businesses predict that investment conditions will improve as sources of instability decrease.

Welcoming the news of the early close of the war on Thursday, businesses set out to pick their investment plans, previously shelved during the war, and devise plans to jumpstart the domestic market.

Businesses is now expecting second half economic pickup

The auto industry expects that if oil prices drop, consumers, postponing purchases on new cars will begin buying again.

Kim Dong-jin, president of Hyundai Motor, chaired an emergency meeting on management plans to discuss measures to boost domestic consumer demand now that the war in Iraq is almost over.

"If exports maintain their current trend and the local market is boosted, it is not difficult to achieve this year`s sales goal," Lee Yong-hoon, a senior official with the company said.

The situation with chemical and petroleum companies is also improving. As the price of naphtha falls, LG Chemical is expecting raw material costs to also reduce, and that Chinese buyers, who account for 50% of their exports, will increase imports.

The shipbuilding industry, which is enjoying all-time high orders this year, has already secured orders for the next two and a half years. Big companies such as Hyundai Heavy Industries, DSME (Daewoo Shipbuilding and Marine Engineering) and Samsung Heavy Industries received shipbuilding orders as well as additional plant exports. DSME has already met their goal of $700 million worth of orders for this year; Samsung Heavy Industries set this year`s order target at $700 million, three times higher than last year`s $200 million; and Hyundai Heavy Industries increased this year`s target to four times that of last year`s.

Domestic factors are important.

"Because of the North Korea nuclear crisis and sagging domestic demand, the economy cannot regain vitality immediately,” a senior official with LG Electronics said. “We plan to continue to invest in a production line for Plasma Display Panels (PDP) as well as continue in R&D.”

An official at Samsung Electronics predicted that since late last year, domestic demand had shrunk, making it difficult for investments, but that consumer and investor confidence would return and in the second half of this year, chip prices would also increase.

Distribution businesses are also looking forward to economic recovery.

"If oil prices fall to the pre-war level, exports will continue to grow and household and credit card debt will see a decline," Lim Song-hak of Kyobo Securities said.

Government is participating in rebuilding of post-war Iraq

The Ministry of Construction and Transportation and the Ministry of Commerce, Industry and Energy are preparing for participation in the rebuilding work of Iraq.

The Ministry of Construction and Transportation has decided to dispatch a group of investigators to Kuwait and Saudi Arabia in order to ascertain construction market trends in the region, and as soon as the investigation is finished, Choi Jong-chan, construction-transportation minister will visit the Middle East to help South Korean companies sign orders.

Commerce, Industry, and Energy Minister Yoon Jin-sik, plans to make a trip to Iran, United Arab Emirates and Oman, with a group of interested parties to receive orders from April 29 to May 7. He is also reviewing measures to hold an exposition for Korean products.