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Lee Kyung-min

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Economy

SMEs collapsing due to virus

gettyimagesbankBy Lee Kyung-min A restaurant owner surnamed Jeong said his business in Myeongdong, Seoul, has no hope of recovery, with his debt snowballing.“I thought August was the worst amid the second wave of the COVID-19 spread, but that is likely to be overshadowed by how I am doing over the next couple of weeks.”He, like many of his peers in the same in-person services business, can no longer see the point of keeping his business open, since the only certainty is that there will be no customers for the foreseeable future.“News reports are all about new infections soaring and people dying. Who would want to risk their lives to go eat out?” The COVID-19 pandemic is tanking small- and medium-sized enterprises (SMEs), a repeated predicament set to take a drastic turn for the worse given social distancing regulations are likely to be raised to Level 3 with new infections topping 1,000 daily for the past few days.Experts say one-off emergency relief of only a couple of thousands of won will do little to help their businesses stay afloat, stressing that extend

Dec 19, 2020By Lee Kyung-min
SMEs collapsing due to virus
Economy

Bank of Korea chief strikes back at land ministry over soaring jeonse prices

Bank of Korea Governor Lee Ju-yeolBy Lee Kyung-min Bank of Korea Governor Lee Ju-yeol made it clear that the recent spike in jeonse prices stems from a supply-demand mismatch in the market, squarely rebutting the claim made by the land minister and ruling party lawmakers who say the record-low interest rate was the chief culprit.Lee's remarks brought to the fore a decades-long issue whereby policymakers and lawmakers point to low interest rates as the driver of housing price spikes, in what the central bank considers an “irresponsible attempt” to divert criticism for policy failures. Implicit in the remarks are criticism of the land ministry's revision to a related leasing law largely criticized as “overly protective” of tenants and considered a reason landlords raised jeonse deposits, switched to asking for monthly rent, or outright pulled their rental properties off the market. This significantly reduced the number of homes available for rent, with more people seeking housing and prices soaring as a result. Unique to Korea, jeonse is a home renting system wh

Dec 18, 2020By Lee Kyung-min
Bank of Korea chief strikes back at land ministry over soaring jeonse prices
Economy

Korea's expansionary fiscal policy to prioritize containment

Deputy Prime Minister and Finance Minister Hong Nam-ki, second from right, speaks during a press briefing at the Seoul Government Complex, Thursday. YonhapConsumption, social safety net strengthened By Lee Kyung-min The government's top priority in 2021 will be the containment of COVID-19, the continued spread of which will weigh heavily on the local job market and consumption, hurting the prospects of a much-needed economic recovery. The Ministry of Economy and Finance announced its economic policy directives for 2021, Thursday, defined by increased emphasis on strengthening the social safety net to limit the fallout of the pandemic-induced massive job losses. The directives offer tax incentives to bolster consumption, which has stagnated due to the repeated rise of social distancing rules.Experts say the overarching directive is a step in the right direction, but it lacks countermeasures in the event of further spread of the virus that shows no signs of immediate containment. Also absent are measures to help small- and medium-sized enterprises (SMEs) which are in tatters due to rep

Dec 17, 2020By Lee Kyung-min
Korea's expansionary fiscal policy to prioritize containment
Banking & Finance

Number of foreign borrowers on the rise

gettyimagesbankBy Lee Kyung-min Local lenders are seeing an increase in loan applications from foreign borrowers, mostly young people in their 20s and 30s seeking credit loans averaging 60 million won ($54,894), a credit information service provider report said Thursday.The foreign loan market has grown and is expected to grow further due to the expansion of tailored financial services for foreigners amid local lenders' collective efforts to identify new customer bases, as illustrated by the expansion of services provided in multiple languages.According to a report by the Korea Credit Information Services (KCIS), the number of foreign borrowers living in Korea was 99,787 and they had a combined balance of 5.97 trillion won in outstanding loans as of June 2020. The number of borrowers grew 26 percent on average between 2016 and 2019, with the annual growth rate of loan balances averaging 9.6 percent.This is much higher than the 1.6 percent growth in the number of borrowers and 5.3 percent growth in the loan balance.The average outstanding loan balance per foreign customer has been on

Dec 17, 2020By Lee Kyung-min
Number of foreign borrowers on the rise
Economy

Job market battered by third wave of COVID-19

Job losses continue for the ninth consecutive month in Nov. By Lee Kyung-min Job losses here continued for the ninth consecutive month in November, the second longest period of increasing unemployment since the 16 months from January 1998 to April 1999 following the Asian financial crisis.It also surpassed the previous eight consecutive months of decline from January through August in 2009 during the global financial crisis.The number of people who said they had been “resting,” soared 10.2 percent, or 218,000, the highest since 2003, when statistics started to be compiled.Experts say December figure will be far worse given the temporary shutdowns of many small- and medium-sized enterprises (SMEs) due to the third wave of the COVID-19 pandemic, as illustrated by new infections being reported in the hundreds every day for the past few weeks and passing the 1,000 mark on two of those days. Data from Statistics Korea showed Korea lost 273,000 jobs month-on-month, since the decline began in March, when the COVID-19 pandemic began to weigh heavily on the local job market.The lo

Dec 16, 2020By Lee Kyung-min
Job market battered by third wave of COVID-19
  • Four major groups brace for tough year ahead
Economy

ANALYSIS Will home price bubble burst?

gettyimagesbankBurden of mortgage repayment hits 11-year high for Seoul apartment owners By Lee Kyung-min Home prices in Korea are unlikely to decline any time soon, due to the combination of cheap borrowing costs and panic-driven buying, sustained by the abject failure of the government's 24 rounds of botched real estate policies that ignored the realities of supply and demand.According to November data from the Citizens' Coalition for Economic Justice (CCEJ), a left-leaning civic group, prices of apartments in Seoul climbed 58 percent over the past three years. This is a further increase from its July assessment where it said the jump in the period was 314 million won, or 52 percent, more than double the 134 million won during the term of President Park Geun-hye between 2013 and 2017. The steady rise of home prices came despite the 24 frantic attempts to control what should be ruled by the market principle of supply and demand, a reaction to anxiety-driven panic buying that ensures further distortion of the market already experiencing liquidity overflow amid a record-low borrowing

Dec 16, 2020By Lee Kyung-min
[ANALYSIS] Will home price bubble burst?
Economy

Will bitcoin replace gold as safe haven asset?

Experts split over future course of digital currencyBy Lee Kyung-min Bitcoin is back in spotlight as it has continued an upward spiral amid lingering uncertainty caused by the fallout of the COVID-19 pandemic, sparking debate over the future course of the digital currency. Opinion is split over whether bitcoin could replace gold as a safe haven asset. Some say this is possible since the gold price has peaked and bitcoin is increasingly being embraced by institutional investors who tend to seek stability over short-term profit.Others say this claim lacks merit because the speculative asset with high price volatility has a variety of “operational” risks.Bitcoin has fallen precipitously in the past few days and is hovering at around $18,000 (19.6 million won) after hitting an all-time high of $19,462.14, Dec.3 (local time). During 2020 the value of the cryptocurrency has risen about 170 percent. The price of gold is hovering at around $1,800 per ounce, Dec.9 (local time), down from a peak of over the $2,050 level in August. It dipped to as low as $1,780, Nov.30.New asset cla

Dec 15, 2020By Lee Kyung-min
Will bitcoin replace gold as safe haven asset?
Economy

Soaring won puts forex authorities in a bind

By Lee Kyung-min The rapid appreciation of the won continues to spell trouble for the foreign exchange authorities in Korea, a repeated dilemma over whether market intervention is needed to “rein in” the fast-soaring local currency that saps the competitive edge of the export-reliant economy. The concern is growing since Korea can look only to exports, which have had a better-than-expected performance amid the COVID-19 pandemic, as the only reason for optimism given the sharp tightening of consumption set to worsen due to a third wave of coronavirus infections.Market intervention via buying U.S. dollars to weaken the won will entail an immediate warning from the U.S., drawing attention to Korea that is already on the list of countries under close monitoring for currency manipulation.Economists and market analysts say the local currency will continue to strengthen as the U.S. dollar is highly likely to weaken following a massive stimulus package pledged by U.S. President-elect Biden.The local currency closed

Dec 15, 2020By Lee Kyung-min
Soaring won puts forex authorities in a bind
Economy

Fiscal woes deepen as number of 'zombie companies' spikes

gettyimagesbank'Strengthened social safety net should limit job losses' By Lee Kyung-minThe number of companies unable to pay interest on loans reached 4,000 in 2019, fueling corporate insolvency concerns exacerbated by “zombie companies” amid the virus-induced economic meltdown due to their shaky financials that had already been in trouble long before the virus came into the picture.Experts recommend corporate restructuring should be pursued equally with strengthened unemployment benefits, coupled with the greater role of private equity funds (PEFs) in the private sector.A zombie company is an indebted business that only has funds to pay off interest on loans, but not the principle loans themselves, depending on creditors or government bailouts to keep afloat. Data from the Korea Capital Market Institute (KCMI) released Dec. 7 during a seminar showed the number of zombie companies subject to external audits that reported interest coverage ratios below 1 for the third consecutive year reached a record high of 4,046 in 2019. The figure jumped from 1,716 in 2007 and 3,082 i

Dec 14, 2020By Lee Kyung-min
Fiscal woes deepen as number of 'zombie companies' spikes
Economy

Carbon-aware policies to take shape

gettyimagesbankBy Lee Kyung-min The government will commission a study to gauge how much economic policies would contribute to its zero-carbon drive, in an early step to reduce carbon emissions to zero by 2050.The Ministry of Economy and Finance said Sunday that a feasibility study would be initiated as early as 2021, mostly on how to measure, deter and manage greenhouse emissions.The approach is part of a carbon-neutral policy initiative outlined by President Moon Jae-in who declared Oct. 28 that Korea would seek to reduce greenhouses gas emissions to net zero by 2050.This will materialize through 8 trillion won ($7.1 billion) in government spending on its Green New Deal, a key part of the Korean New Deal, defined by a five-year investment of 160 trillion won.This is to reduce reliance on coal, the largest source of energy for Korea's key industries. According to ministry data, coal accounted for 40.4 percent of the country's energy sources as of 2019, followed by nuclear power (25.9 percent) and liquefied natural gas (25.6 percent).The ministry's plan follows a similar bill propose

Dec 13, 2020By Lee Kyung-min
Carbon-aware policies to take shape
  • LG Chem to purchase renewable energy from China for carbon neutrality
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