30 groups to expand investment by 12.3%

By Kim Tae-gyu

Korea’s 30 largest conglomerates promised to raise their investments by double digits this year to a combined 151.4 trillion won ($131.4 billion), up 12.3 percent from 134.8 trillion won in 2011.

In a breakfast meeting with Knowledge Economy Minister Hong Suk-woo Friday, leaders of the 30 groups also pledged to recruit 120,000 new employees in 2012, up 2.2 percent from last year.

Although the Ministry of Knowledge Economy (MKE) claims that the goal is plausible, some say the increase is overblown considering the uncertain economic conditions.

``We just collected the expenditure plans of the 30 conglomerates and did not push them to boost the figures at all. Accordingly, we think that the investments will actually be made,’’ MKE director Kim Sung-chil said. ``In the latter half of this year, we will double check on whether the investment plans have been attained.’’

Included in the major targets of investment are futuristic technologies such as next-generation memory chips, system semiconductors, organic light-emitting diodes and long-term evolution networks.

The groups, which include No. 1 Samsung and runner-up Hyundai Motor, are also set to channel funds into eco-friendly technologies such as low-emission vehicles, renewable energy and rechargeable batteries.

``On top of the large groups, we are currently in talks with small and medium-sized enterprises to learn about their investment and recruitment plans. We will systematically check on these areas which are significant to the health of the economy,’’ Kim said.

Pessimists, however, brand the bold targets as overly optimistic.

``Companies tend to come up with somewhat grandiose figures when they are asked to present investment plans by the government,’’ said a Seoul analyst who asked not to be named.

``The first thing corporations do during a downturn is to cut investment but Korean firms are poised to increase it by double digits this year. I can hardly believe it.’’

In the meantime, the groups agreed to exert their best efforts to save electricity as concerns mount that Asia’s fourth-largest economy might face a power cut this winter.

The country suffered from an unprecedented rolling blackout in September when electricity consumption shot up amid an unseasonable heat wave. The blackout prompted former Knowledge Economy Minister Choi Joong-kyung to step down.

Worries continue this winter that similar power outages can take place because electricity demands are typically higher in the winter than in the summer and MKE has asked manufacturers to proactively take part in contingency plans if there are power shortages during peak hours.