118 bln dollars to be invested by major companies this year

Korea’s 600 largest companies are planning to spend 129.7 trillion won (118 billion U.S. dollars) in investment this year, an increase of 13.9 percent from last year.

The Federation of Korean Industries released Sunday the result of a survey on investment plans for this year of 600 largest companies in Korea (as of at the end of 2011, excluding financial businesses). “Considering respondents were 468 companies, which included most of major businesses, the total amount of investment of the 600 companies will be bigger,” the federation said.

Investment in facilities is to be increased by 16.3 percent year-on-year to 106.6 trillion won (97 billion U.S. dollars), while investment in R&D rose by 3.6 percent to 23.1 trillion won (21 billion dollars). By business type, the manufacturing sector will invest 82.77 trillion won (75 billion dollars), an increase of 13.2 percent from last year, and the non-manufacturing sector will invest 46.92 trillion won (43 billion dollars), an increase of 15 percent. Among manufacturers, petroleum refining, shipbuilding, and transportation businesses will lead investment expansion, while non-manufacturers’ investment will be significantly increased at the businesses of electricity, gas, water, and wholesalers and retailers.

Reasons for investment include preemptive investment to boost compatibility (27.9 percent), product and technology development (19.7 percent), and launching new businesses such as new growth industry (19.2 percent). 113.92 trillion won (104 billion dollars) last year was invested by the 600 companies, a 1.9 percent increase from the previous year.

A source from the federation said, “Over the past decade, the 600 largest companies have steadily expanded investment, except 2009 when the country was hit hard by the Asian financial crisis. Though the economic conditions are not good both home and abroad this year, the companies seem to have decided to increase investment to secure growth engines for the future.”