Hankyung Research Institute: "58% of Domestic Companies Undecided or Reducing Domestic Investment This Year"

Hankyung Research, Survey on Investment Plans of Top 500 Companies by Sales This Year

[Asia Economy Reporter Su-yeon Woo] As uncertainty in the global economy expands due to the resurgence of COVID-19, more than half of domestic companies are unable to set investment plans for this year or plan to reduce them.

On the 11th, according to a survey conducted by the Korea Economic Research Institute targeting the top 500 companies by sales, among the 100 companies that responded, 58% said they have not yet established investment plans for this year or plan to reduce investment compared to last year.

Companies with no or undecided investment plans accounted for 48%, those planning to reduce investment 10%, and those maintaining last year's level 21%, while only 21% said they would expand investment. Choo Kwang-ho, head of economic policy at KERI, said, "Despite recent signs of economic recovery, companies are still unable to aggressively expand domestic investment," adding, "Institutional support to revitalize corporate investment is more important than ever."

Source=Korea Economic Research Institute

KERI also forecasted that more than half of the top 500 companies by sales reduced investment last year, and this trend is likely to continue this year. However, the total investment amount of the top 500 companies last year was 82.4 trillion won, and this year's total investment amount is expected to be linked to investment decisions by some large companies such as Samsung Electronics.

Companies cited reasons for not increasing investment this year as ▲economic uncertainty such as COVID-19 resurgence (49.3%) ▲completion of major projects (21.5%) ▲lack of investment capacity due to deteriorating management (15.2%). Responses indicating institutional reasons such as corporate-related regulatory legislation or reduction of investment incentives also accounted for 14%.

The satisfaction score for the domestic investment environment was only 45.5 out of 100 points, showing that companies generally evaluated the domestic investment environment negatively. The proportion of companies that evaluated the domestic investment environment negatively was 28%, about 2.5 times higher than the 11% that evaluated it positively.

Policies that the government or National Assembly should pursue to revitalize investment included deregulation (47%), financial support (43%), and tax support (41%). The main regulations hindering investment were local government permits and review regulations (23.6%), environmental regulations (18%), employment and labor-related regulations (18%), and restrictions on business activities (16.2%), in that order.

Regarding overseas investment, 75.4% of companies operating overseas factories responded that they would maintain or expand investment levels this year compared to last year. This figure is 1.8 times higher than the 42% who responded that they would maintain or expand domestic investment levels. The reasons for overseas investment were led by targeting local markets at 67.1%, followed by low labor costs (17.7%) and low regulatory burden (6.3%).

This content was produced with the assistance of AI translation services.