By Kim Tae-gyu
Staff Reporter
In the late 1990s, the Kim Dae-jung administration brought forth a pair of policies to overcome the Asian currency crisis ― boosting consumption via credit cards and nurturing venture start-ups.
Both appeared to work in the short run but they eventually ended up causing the IT bubble burst and the credit crisis in the early 2000s.
Will history repeat itself? The Lee Myung-bak administration's all-out efforts of promoting renewable energy businesses to fight the financial crisis is accused of inflating a ``green bubble.''
According to the Ministry of Knowledge Economy, Thursday, the number of Korean firms specializing in green energy has almost doubled in a year to some 3,100 this January from some 1,700 a year ago.
``Many of the new ventures are too small to conduct eco-friendly business, which requires huge investments,'' said a source setting up a fund to invest in wind power.
``What do you think they want, then? I suspect that some of them are just eyeing state subsidies without any substantive business plans, as the government is ready to support the industry,'' he said.
Asia's fourth-largest economy plans to channel 679.1 billion won in developing naturally-replenishing energy including sunlight, wind, geothermal and tidal this year alone.
In addition, the country is to invest 50 trillion won through 2012 in low-carbon infrastructure initiatives.
The anonymous source, who works for one of the nation's biggest financial institutions, claimed the country needs to beef up the entry barrier for the emerging industry.
Currently, any entity with more than 200 million won in capital and two specialists can register as a renewable-energy outfit. The minimum capital criteria can be different in some areas.
Kim Se-jung, an analyst at Shin Young Securities, concurs. He first raised the possibility of a green bubble last December when the Green New Deal stimulus policy was announced.
``The investment in environmentally-friendly energy might benefit some interest groups posing as green-energy companies,'' Kim said.
``That could threaten economic stability as the IT and venture bubbles did after the currency crisis wrapped up,'' he said.
However, Kim said the government would have no choice but to focus on pump-priming measures in green energy because the economy is struggling so badly.
``It's understandable that the government puts concerns about a green bubble on the back burner but it should not forget about it,'' he said.