S. Korean firms reluctant to increase investment

SEOUL, Feb. 25 (Yonhap) -- Most of South Korea's big companies will curb capital
spending this year to cope with gloomy business conditions, despite desperate
pleas from the government to expand investment, industry sources said Wednesday.
The Lee Myung-bak administration has been fervently pursuing ways to kickstart
the slowing economy. As part of this government drive, Finance Minister Yoon
Jeung-hyun on Tuesday urged local business leaders to increase jobs and
investment.
South Korea's jobless rate rose to 3.6 percent in January, with the local economy
shedding 103,000 jobs that month from a year earlier.
Amid such bleak data, Samsung Electronics Co., the world's largest maker of
computer memory chips, remains undecided on how much it will spend on investment,
according to the sources.
Forecasts for the global electronics industry remain murky. During an exhibition
held last month, Samsung indicated only that its total investment will reach at
least about 3 trillion won (US$2 billion won) this year. Samsung invested 10
trillion won in facilities last year.
"It is very hard to reveal the precise amount of this year's investment due to
the gloomy business forecast," said a company official, who spoke on condition of
anonymity.
South Korea's No. 2 electronics firm, LG Electronics Inc., has said it will
invest about the same amount it did last year.
"The 2009 investment is expected to be similar to that of last year as spending
on facilities will be decreased instead of increasing R&D investment," said an
official at LG Electronics.
LG Electronics spent around 2.4 trillion won last year for research and
development (R&D) and for the expansion of facilities.
Hynix Semiconductor Inc., the world's second-largest computer memory-chip maker,
plans to invest about 1 trillion won to expand its facilities. But the figure
falls short of an investment forecast last year that put it between 1 and 2
trillion won.
Similarly, LG Display Co., the world's second-largest maker of liquid-crystal
displays, is estimated to spend between 2 to 2.5 trillion won this year -- down
nearly 50 percent from last year.
The company has said additional spending on its workforce and facilities is not
necessary this year, as it made large investments in 2008 to expand its
production lines.
Capital expenditures by shipbuilders are predicted to be close to the same amount
as last year.
Hyundai Heavy Industries Co., the world's top shipbuilder, will spend 1.4
trillion won on facilities and 236.7 billion won on R&D, while Samsung Heavy
Industries Co. the world's No. 2 shipyard, will invest about 800 billion won.
The world's No. 3 shipbuilder, Daewoo Shipbuilding & Marine Engineering Corp.,
will invest 5 trillion won in R&D and facilities.
In contrast to shipbuilders, POSCO plans to make its biggest investment ever this
year. South Korea's leading steelmaker has said it will spend 6 trillion won this
year -- up from last year's 4.9 trillion won -- to upgrade its facilities in
Pohang and Gwangyang, both in the southern part of the country.
Other major local business conglomerates, including Hyundai Motor Group, SK Group
and Kumho Asiana Group, have yet to determine their investment plans for this
year.
ksnam@yna.co.kr
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