The Korea Times

Real growth expected to fall below potential

By Kang Seung-woo Korea’s real economic growth is forecast to fall short of its potential next year due to the global economic slowdown, three private think tanks said Wednesday. As a result, there will be little room for the central bank to raise its key interest rate. According to Samsung, LG and Hyundai economic research institutes, the nation’s economy has shown a fast-paced recovery since the global financial crisis, but the slumping world economy, sparked by advanced countries’ debt crises, will put its inflation-adjusted gross domestic product (GDP) below its potential growth rate. The Samsung Economic Research Institute (SERI) estimated that economic growth for next year will be 3.6 percent, compared with a 3.8 percent potential. It said the GDP gap, which denotes the difference between potential and actual output, would be negative at 7.7 trillion won ($6.69 billion) next year, down from 2010’s 5.9 trillion won. A positive GDP gap, where the actual amount exceeds the potential GDP, is called an inflationary gap and indicates the growth of aggregate demand i

Oct 20, 2011By Kang Seung-woo

Companies

S-Oil completes world’s largest PX plant

By Kang Seung-woo ONSAN, Ulsan ― S-Oil has stepped up to join the industry’s elite with the world’s largest petrochemical production plant. The Korean oil refiner, headed by CEO Ahmed Subaey, held a ceremony Thursday for the completion of the paraxylene (PX) production facilities at its factory in Onsan, Ulsan, North Gyeongsang Province, where President Lee Myung-bak and Ali Al-Naimi, the Saudi Arabian minister of petroleum and mineral resources, were present. PX is a raw material for polyester (chemical fiber) and water bottles (PET). Under the title of the Onsan Refinery Expansion Project, S-OIL invested 1.3 trillion won as part of its efforts to secure future growth engines and broke ground for the expansion on June 11 2009. The completion of the plant, also known as the No. 2 Aromatic Complex, enables S-Oil to annually produce 1.7 million tons of PX, the largest among single plants in the world and 560,000 tons of benzene. This almost doubles the refiner’s original production capacity, catapulting the company to one of the most competitive suppliers of petrochemical p

Oct 20, 2011By Kang Seung-woo

Companies

Insurers face allegations of price rigging, corruption

By Kang Seung-woo Greed and irregularities are sweeping the local insurance industry, latest figures showed Wednesday. A large number of insurers were slapped with fines for price rigging, while their misleading product sales are on the increase, leading to more customer complaints being filed with the courts. In addition, many of their high-paid auditors are from government authorities such as the Financial Supervisory Service (FSS), National Tax Service (NTS) and Board of Audit and Inspection (BAI), and are said to be shielding the insurers from charges of corruption. Last week, the Fair Trade Commission (FTX) fined 12 life insurance companies a combined 365.3 billion won ($320.36 million) for colluding to fix interest rates for years. The 12 entities are Samsung, Kyobo, Korea, Mirae Asset, Shinhan, Tong Yang, KDB and Heungkuk life insurances, ING Life Korea, AIA Life Korea, Metlife Korea and Allianz Life Korea. Samsung Life was ordered to pay the largest amount in penalties at 157.8 billion won, followed by Kyobo Life and Korea Life, which have to pay 134.2 b

Oct 19, 2011By Kang Seung-woo

Companies

Businesses jumping on card fee cut bandwagon

By Kang Seung-woo Following a rally by local restaurant owners, the entertainment and luxury goods industries plan to rally against credit card companies, demanding commission cuts. Amid growing pressure, including from politicians, credit card firms decided to cut fees charged to small retailers to 1.8 percent. In addition, the card industry expanded its definition of small- and medium-sized merchants from 120 million to 200 million won in annual sales. However, entertainment establishments and jewelry shops were left off the list of beneficiaries and those industries, which expected to be included, are infuriated with the omission. Businesses that will not enjoy the lower card fees include room salons, bars, nightclubs, karaoke bars and massage parlors as well as shops selling jewelry, antiques, artworks and sex toys. Card issuers charge 4.5 percent commission to those businesses. Card fees for most other industries range from the mid-1 percent to mid-3 percent. “Other than some doing business in certain areas including Gangnam, most owners are those who make thei

Oct 19, 2011By Kang Seung-woo

Companies

Auto insurers enjoying business improvement

By Kang Seung-woo Non-life insurance companies are enjoying increasing profits thanks to improvements in their car insurance business, industry figures show. The companies’ loss ratio on auto insurance declined for the second straight month in September, which added pressure on the firms to lower insurance premiums for customers. The loss ratio of 74.1 percent last month represented a decline from 75.7 percent in August and a 14 percent drop year-on-year. The loss ratio refers to the amount of compensation paid to policy holders compared with the insurance fees they pay. Auto insurance providers say that a sub-80 ratio is a minimum requirement for a profitable business. Last year, the car insurance loss ratio posted an all-time yearly record of 80.3 percent, with a loss of 1 trillion won in the sector. The ratio, which reached 90.4 percent in December last year, fell below the 70 percent mark in February and has been hovering in the mid-70s ever since. The recent figures are much better than what the companies had been expecting, considering the number of cars dama

Oct 17, 2011By Kang Seung-woo

Companies

Regulator to toughen rules on ’Yeouido greed’

By Kang Seung-woo Korea’s financial authorities, apparently alerted by the anti-Wall Street protests reaching Seoul, are upping their speechifying against what they see as overflowing corporate greed in the financial district of Yeouido. Officials at the Financial Services Commission (FSC) say the regulator is ready to regulate “excessively” high salaries and large dividend payments at banks, securities firms and other financial companies. “It is not easy for the government to interfere in private firms’ decisions about wages and dividends. But it is obviously a problem that financial institutions are quick to approve massive dividend payments whenever they can when many of them had been bailed out by taxpayer money during times of trouble,’’ an FSC official said Sunday on condition of anonymity. Local banks have been facing a public relations crisis after they were forecast to pay out hefty dividends on the strength of their record profits. According to official figures, the country’s 18 local banks combined for a net profit of around 10 trillion won in the first s

Oct 16, 2011By Kang Seung-woo

Companies

Credit card firms having a blast in hard times

By Kang Seung-woo Local credit card companies are expected to bask in record profits this year on the strength of steadily growing commission profits, the financial watchdog said on Sunday. According to the Financial Supervisory Service (FSS), the credit card industry raked in 701.6 billion won in net profits in the first half of this year, down from 861.7 billion won earned last year. Although the figure marks a decrease, a closer look reveals practical growth. Due to new accounting standards, card companies had to set aside 500 billion won in loan-loss provisions of which they reserved 200 billion won in the first six months of last year. Considering the increased bad-debt provision, the actual net income climbed by 140 billion won. The net profit of the credit card industry has rising steadily after reaping 1.66 trillion won in 2008 and 1.86 trillion won in 2009. Among the gains of a card firm, card fees account for about 60 percent to 70 percent and the commission surges year after year. In 2008, it tallied 5.58 trillion won, followed by 6.12 trillion won

Oct 16, 2011By Kang Seung-woo

Companies

Is 3.4 percent jobless figure statistical mirage?

By Kang Seung-woo While most countries in the world are plagued by a growing jobless rate amid the ongoing global financial turmoil, Korea appears far from the trouble, posting a 3 percent unemployment rate last month, seen as de facto full employment. Despite the low mark, observers say the statistical office’s way of compiling data does not reflect the realities of the labor market. According to Statistics Korea on Wednesday, the nation’s unemployment rate was 3 percent in September, unchanged from the previous month, and down from the 3.4 percent recorded the same month a year ago. In comparison with major countries, Korea stood out in terms of the September jobless rate. The United States stood at 8.8 percent, while France and Germany were at 10 percent and 5.9 percent respectively. Neighboring Japan tallied 4.4 percent. Based on OECD standards, Korea’s employment rate stood at 63.6 percent, compared with the U.S. reading of 66.8. Critics say that people polled in the monthly survey for employment trends are divided into three categories: employed, unemploye

Oct 14, 2011By Kang Seung-woo

Companies

Merchants call for cut on card issuers’ fees

By Kang Seung-woo The financial regulator’s drive to introduce a minimum purchase amount to charge to a credit card in its efforts to help reeling small retailers has run into unexpected opposition the response that it is “nonsense.” Instead, they insist that the government flex its muscles to lower hefty transaction fees if it truly wants to show support. The Financial Services Commission (FSC) said Monday that it is considering amending current rules to allow sellers to reject credit cards for small payments. The minimum permissible transaction amount under consideration is 10,000 won or $8.54. An existing regulation of the Credit Finance Association (CFA) stipulates that a card merchant refusing a credit card transaction faces up to one year in prison or fines of 10 million won. According to the FSC, 30.6 percent of total credit card transactions in September were for 10,000 won or less, a burden for smaller retailers who have to pay commission. “If the new rule takes effect, there will be no business owners refusing card payments because customers will simply go s

Oct 13, 2011By Kang Seung-woo

Companies

OECD leading index shows Korean economy stalling

By Kang Seung-woo Korea’s economy remains locked in a global downturn according to a key indicator Wednesday. In the Composite Leading Indicators (CLI) of the Organization for Economic Cooperation and Development (OECD), Korea stood at 98.8 in August, down 0.6 points from the previous month. It represents the third straight month that Korea’s indicator was below 100. The CLI is a composite economic indicator that gauges how the economy will fare six months in the future by measuring the current industrial output, housing and financial market conditions, and the gross domestic product (GDP) of each nation. As for the indicators, the OECD tracks the economy through four stages: expansion, downturn, slowdown and recovery. A CLI above 100 shows an expansion, while one below 100 with consecutive drops month after month means a slowdown. The Korea’s CLI fell below the 100 mark in June after posting 99.963 and has been on the decline for the third straight month, with the July reading at 99.4, indicating the nation’s economy is likely to enter an economic downturn. Th

Oct 12, 2011By Kang Seung-woo

Kang Seung-woo

Read more

Real growth expected to fall below potential

S-Oil completes world’s largest PX plant

Insurers face allegations of price rigging, corruption

Businesses jumping on card fee cut bandwagon

Auto insurers enjoying business improvement

Regulator to toughen rules on ’Yeouido greed’

Credit card firms having a blast in hard times

Is 3.4 percent jobless figure statistical mirage?

Merchants call for cut on card issuers’ fees

OECD leading index shows Korean economy stalling

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