Corporate Properties to Be Purchased
By Jane Han
Staff Reporter
The government plans to allocate 6 trillion won to buy up companies land that is not being used for business, as well as housing lots from cash-strapped builders to help ease jitters over tight money flows.
State-run developer Korea Land Corporation (KLC) will purchase properties from liquidity-crunched companies that are willing to put their land up for sale to secure quick cash, said Chung Woo-jin, an official of the Ministry of Land, Transport and Maritime Affairs.
The amount the government is planning to inject is around six trillion won, but details will be announced later this week in conjunction with the Ministry of Strategy and Finance, he said.
The latest plan would allow a manufacturing firm, for example, to sell off a lot that wasn't being used for producing goods. Real estate prices would be valued at around 70 to 80 percent of the market price.
According to the Korea Federation of Small Business (KFSB), a group representing small- and medium-enterprises (SMEs), many small firms have land categorized as ``not-for-business'' as they often build new facilities on a separate lot, leaving the existing one temporary empty.
``Businesses have to pay higher tax for properties classified as not-for-business, so the plan will be help many SMEs cut tax expenditure,'' said an official of the group.
The last time the government sought to buy land for this purpose was a decade ago, following the 1997 Asian Financial Crisis. At the time, KLC put in 2.6 trillion won to buy up land from struggling companies.
The other part of the plan will allow suffering builders to dump their land with the KLC without having to construct new homes, knowing that they will end up unsold.
The government will even allow already-sealed contracts between the KLC and private builders to be cancelled to free up wobbling firms from paying soaring interest. Approximately two to three trillion won of the six trillion won budget will be earmarked for this purpose, according to ministry sources.
Choi Sang-keun of the Construction Association of Korea, a domestic builders group, said the government-backed aid would help lift a heavy burden of loan payments and mental pressure.
``There is no point in building a new apartment these days because builders are in the red even from the start from slow pre-sales,'' said Choi. The land ministry's data says there are about 160,000 unsold homes in the market, while builders say there are about 250,000.