LA LETTRE DE CORÉE Novembre 2003
Centre Coréen du Commerce Extérieur et des Investissements
http://www.kotraparis.com
KOTRA PARIS - 19 avenue de l'Opéra - 75001 Paris Téléphone : +33 (0) 155 35 88 80 - Télécopie : +33 (0) 155 35 88 89 - email : fckotra@hotmail.com M. Dong Wong Lee - Directeur M. Frédéric Claveau - Responsable Investissements
¤ RELATIONS INTERNATIONALES
- Korea-Germany tech group
- North Korea's economic collapse seen as inevitable
- North Korea's economy heading for collapse: Standard and Poor's
- North Korea wants foreign lawyers, accountants
- NK takes in $1.2 bil. in southern investment
¤ POLITIQUE ECONOMIQUE, MACRO-ECONOMIE ET RESTRUCTURATIONS
- En Corée du Sud, le gouvernement est tenté de répondre aux excès de journaux très critiques
- L'économie sud-coréenne tourne le dos à la récession
- Korea ranks 3rd in market potential of emerging nations
- Korea outgrows economic development model
- Korea has no choice but to focus on technology'
¤ INVESTISSEMENTS
- Korea ranks 18th in investment table
- Restore Korea's good image, EU businesspersons say
- 'Korea must copy others to attract more FDI'
- "Invest Korea" heralds a new investment regime
- Improved incentives to stimulate FDI
- Ministers seek ways to lure foreign direct investment
- Tax revision focuses on luring investment
- Korea needs to develop strategy for foreign property investment
¤ SECTEURS ECONOMIQUES
¤ ENTREPRISES COREENNES
- JO d'Athènes : le coréen Samsung Electronics augmente son partenariat
- Samsung Electronics se pose en grand rival des japonais
- Samsung produit le plus grand écran plat LCD au monde
¤ ENTREPRISES FRANÇAISES
- Tartine et Chocolat attracts Korean children
KOREA-GERMANY TECH GROUP
South Korea and Germany agreed Thursday to establish a bilateral committee on industrial technology cooperation to step up joint research and development in advanced technologies, officials said.
Kim Jong-gap, assistant minister of commerce, industry and energy, and German counterpart Herbert Diehl of the Federal Ministry of Education and Research exchanged a memorandum of understanding in Bonn, Germany, about establishing the committee to be funded jointly by the two governments.
The two countries will set joint goals and tasks for research and development activities as well as industrial technology cooperation through the committee, officials said.
Research and development projects will be focused on information-communications, biotechnology, industrial materials manufacturing and nano-technology, they added.
The committee will be composed of 16 experts from each country's industrial, academic and research groups. Source : Korea Times - 07/11/03
NORTH KOREA'S ECONOMIC COLLAPSE SEEN AS INEVITABLE
A leading credit rating agency says North Korea's economic collapse is inevitable, and South Korea should prepare to shoulder the enormous burden that will create.
Analysts from the Standard & Poor's agency say North Korea's collapse will cost South Korea hundreds of billions of dollars, and they warn the resulting economic emergency could consume up to three times South Korea's entire annual output, which is currently about $480 billion.
John Chambers, Standard andamp; Poor's managing director for sovereign ratings, told reporters in Seoul Monday that "it's only a question of time when North Korea collapses, because its current economic model is not sustainable."
Standard & Poor's analysis did not estimate when North Korea's faltering Communist economy might come to a halt.
The agency said it sees the current international concern over North Korea's nuclear development program as a key issue limiting South Korea's credit rating, which in turn affects the interest rate the country pays for loans.
North Korea began some tentative economic reforms last year, but they have had only a limited impact on the impoverished Stalinist state, which is virtually bankrupt.
Unification of the two Korean states has long been the Seoul government's goal. Economists in the South reportedly have estimated that would cost between $200 billion and $1.2 trillion, depending how quickly unification could be accomplished.
Their estimates are based on the costs West Germany faced when it absorbed the former East German Communist state 12 years ago. South Korean officials also note that West Germany was wealthier than South Korea is today, and that East Germany was far more prosperous than North Korea.
Some information for this report provided by AFP and Reuters - Source : VoA - 03/11/03
NORTH KOREA'S ECONOMY HEADING FOR COLLAPSE: STANDARD AND POOR'S
The credit rating agency Standard and Poor's says North Korea's economy is heading for collapse, and could drag South Korea down with it.
Choi Jung-Tai, the agency's director for South Korea, says the North Korean economy cannot be sustained in its current state.
He says the agency believes a collapse is highly likely, but when, is uncertain.
It is a change in forecast for the agency, which earlier this year released a report saying a collapse was unlikely.
Mr Choi says a North Korean collapse would have a big impact on South Korea - the world's 11th largest economy.
He says there is no absolute figure, but the cost to South Korea could be two or three times its Gross Domestic Product. Source : Radio Australia News - 03/11/03
NORTH KOREA WANTS FOREIGN LAWYERS, ACCOUNTANTS
North Korea wants foreign lawyers and accountants to set up shop for the first time to help attract overseas investment under the communist state's nascent economic reforms, a British lawyer-turned-consultant said on Wednesday.
Michael Hay, who has had business links with the North since 1998, told Reuters he had been granted permission this month to open a liaison office in Pyongyang and asked to find potential law and accountancy firms.
''Already several firms have privately expressed interest, and this opening is intended to facilitate the work of coordinating the review and evaluation of inquiries from candidate firms,'' said Hay, who will also use the office for his own consultancy work for foreign businesses.
The North wants to issue one licence each to a law firm and accountancy company from overseas. South Korea does not allow foreign law firms to operate independently in its country.
In July last year, North Korea launched limited economic reforms that included freeing some prices and allowing some markets to open to sell produce. Inflation has risen dramatically, according to the South's Unification Ministry.
Plans to set up a free trade zone in a city on the Chinese border have not yet materialised and much of the country's industry is scarcely working. But diplomats and travellers to Pyongyang say markets are springing up across the country and GSM-standard mobile phones can now be seen in the capital.
Hay said numerous foreign joint ventures were already operating quietly in North Korea and there were many opportunities, for example in mining and energy exploration.
- REFORMS ALIVE
Last week, North Korea awarded a Norwegian oil services firm a contract to study the prospects for oil and gas production and to make an offshore seismic survey.
Hay said the selected law and accountancy firms would have exclusive rights for a negotiated period.
''This move is fully consistent with the DPRK's emphasis on the need for companies to be fiscally self-sufficient,'' said Hay. DPRK are the initials of the North's official name, the Democratic People's Republic of Korea.
''This has produced an increased drive for efficiency, domestic competition, recognition of certain fundamental market principles and an increased push for foreign investment,'' he said of the reform efforts.
''Reports that these reforms are abandoned are flatly contradicted by anyone who has actually visited the country recently.''
Hay, who speaks Korean and is a regular visitor to North Korea, said Pyongyang was committed to finding foreign law and accountancy houses willing to set up in the North.
''It is going to issue licences to serious and credible contenders in their respective professional fields,'' he said. ''The DPRK is not looking for a quick fix.''
North Korea is involved in a diplomatic standoff with the United States and neighbouring countries over its nuclear weapons ambitions. This has an impact on potential foreign investment, sometimes even in the South. But Hay said foreign firms in the North were there to earn a profit and the North fully understood the concept. 'Even now, there is far more going on business-wise behind the current headlines than people realise,'' he said. Source : Reuters - 28/10/03
NK TAKES IN $1.2 BIL. IN SOUTHERN INVESTMENT
Investment in North Korea by local companies has totaled $1.16 billion over the past eight years, dominated by the Korea Electric Power Corp (KEPCO) project to build two light-water nuclear reactors in the North, the Ministry of Unification said on Tuesday.
In a report to the National Assembly, the ministry reported 25 South Korean companies, including Hyundai Asan, Hyundai Merchant Marine (HMM) and Samsung Electronics, had invested $1.15 billion in the North as of August, after Daewoo Corp. first invested $5.12 million in building a textile plant in the Nampo Industrial Complex near Pyongyang.
KEPCO¡¯s reactor project accounted for 83 percent, or $954.58 million, of the total investment, the report said.
To develop the Mt. Kumgang tourism area, Hyundai Group companies _ Hyundai Asan, HMM and Hyundai Engineering and Construction _ have spent $144.81 million since 1999.
Private sector donations from the South to the North have amounted to $242.3 million since September 1995, according to the report.
The investment for Pyonghwa Motors, an inter-Korean joint venture producing the 1.6-liter Hwipparam (whistle) sedan in the North, has reached to $25.1 million over the past six years.
Taechang Co., a leading apparel maker, has invested $5.53 million to produce bottled water at a plant near Mt. Kumgang, while the South Korea-based International Corn Foundation has delivered $5.46 million to the North for research and development on corn breeding.
Other major investment projects included $2.48 million by Kukyang Shipping, $1.97 million by Green Cross and $1.75 million by Samsung Electronics.
Six companies, including Korea Exchange Bank, Web program developer Aza Communication and Korea Institute of Nuclear Safety, have also started investment in the North in earnest.
Bae Keun-min Staff reporter kenbae@koreatimes.co.kr - Source : Korea Times - 28/10/03
- EN CORÉE DU SUD, LE GOUVERNEMENT EST TENTÉ DE RÉPONDRE AUX EXCÈS DE JOURNAUX TRÈS CRITIQUES
Le poids des télévisions d'Etat et celui de trois grands quotidiens nationaux répercutant les vues du pouvoir économique suscitent dans l'opinion le besoin de médias plus indépendants.
"Intimidés ? En avons-nous l'air ?", questionne, narquois, Kim Young-hie, vice-président du JoongAng Ilbo, l'un des trois "poids lourds" de la presse écrite sud-coréenne. La récente condamnation par l'Institut international de la presse (IPI) des "tentatives continues du président sud-coréen Roh Moo-hyun d'intimider et de harceler les principaux journaux indépendants" a soulevé dans le pays un tollé de la presse de droite comme de gauche. La Corée du Sud jouit d'une liberté de la presse enviable, au point de frôler parfois la diffamation, et les critiques de l'IPI, rejetées par le gouvernement comme non fondées, sont jugées "absurdes" par plusieurs de nos interlocuteurs qu'ils se situent dans le camp conservateur ou progressiste. Certains font valoir que du temps des dictatures, lorsque la presse était effectivement muselée, IPI était moins virulent.
Que la liberté de la presse ne soit pas en cause ne signifie pas que le monde médiatique sud-coréen n'ait pas problèmes : d'abord, celui de la concentration de la presse écrite entre les mains de trois quotidiens nationaux au tirage important (plus de 2 millions d'exemplaires chacun) qui font dire à leurs adversaires qu'avec deux tiers du marché, ils détiennent un quasi-"monopole de l'opinion". Ensuite, le contrôle de fait par le gouvernement de deux des principales chaînes nationales de télévision : les présidents des chaînes KBS et MBC sont en effet nommés par le chef de l'Etat.
Les trois "grands", Chosun Ilbo, Dong-Ah Ilbo et JoongAng Ilbo (connus sous l'appellation générale de "Chodongjoong" pour stigmatiser le bloc qu'ils forment), constituent des empires éditoriaux et familiaux en guerre ouverte avec le président Roh Moo-hyun. Le chef de l'Etat a entamé cet été une action en justice contre les trois quotidiens exigeant des dommages et intérêts pour des articles sur des affaires financières peu claires auxquelles seraient mêlés ses proches, dont son épouse. Cette initiative, sans précédent pour un président en exercice, a provoqué une levée de boucliers et M. Roh a dû faire marche arrière en suspendant la procédure jusqu'à l'expiration de son mandat. La contre-attaque du chef de l'Etat était maladroite : il a semblé vouloir juguler plutôt que de réformer un secteur si malmené par les dictatures qui a une sensibilité à fleur de peau.
En dépit de la démocratisation à partir de 1987, les trois grands quotidiens n'ont guère changé et reflètent comme par le passé les opinions du camp conservateur. Les rapports entre le pouvoir et Chodongjoong n'ont jamais été très sains. Du temps des dictatures militaires entre 1961 et 1987, - à l'exception du Dong-Ah qui a dû jeter l'éponge en 1975 -, les grands quotidiens s'étaient pliés à la censure. Leur attitude les a servis. Les généraux leur garantissaient une quasi-immunité fiscale en échange de leur "coopération" et longtemps l'opinion publique ignora les abus en matière de malversations des conglomérats ou d'abus en matière de droits de l'homme, sauf pour une minorité ayant accès à la presse étrangère.
- NOUVEAUX VENUS
La démocratisation a permis la création de nouveaux médias tel que le quotidien Hangyoreh, de centre gauche et dont le capital appartient à de petits actionnaires et aux journalistes. Mais les grands journaux, dirigés par les mêmes "barons" que par le passé ont continué à entretenir des rapports étroits avec le pouvoir politique et économique : avantages dispensés aux journalistes, informations biaisées, etc. Aujourd'hui les "trois grands", dont le ratio de publicité dans leurs pages voisine les 60 %, restent largement inféodés aux conglomérats.
Attaqué sans arrêt par "Chodongjoong", l'ex-président Kim Dae-jung, figure de la lutte pour la démocratie, a riposté en 2001 en faisant poursuivre les trois quotidiens pour évasions fiscales. Une procédure qui a conduit à l'arrestation de leurs dirigeants et fut ressentie comme une "vendetta". Son successeur, Roh Moo-hyun n'a pas été épargné par les trois grands titres depuis son entrée en politique au début des années 1990 et il nourrit une animosité certaine à leur égard. Depuis son arrivée à la présidence, il est systématiquement critiqué pour une politique jugée trop laxiste à l'égard de la Corée du Nord et des syndicats.
Les motivations de son action en justice étaient contestables, mais il n'en existe pas moins une demande de réforme des médias de la part de l'opinion.
Le quasi-monopole des télévisions d'Etat diffusant les vues du gouvernement d'un côté et l'oligopole de "Chodongjoong" répercutant celles du pouvoir économique et du camp conservateur de l'autre ne reflète qu'une partie du spectre médiatique sud-coréen. Il existe aussi des journaux centristes tels que Hankuk Ilbo, le quatrième "grand" qui touche un lectorat "petit bourgeois" et, plus petit, le Naiel Shinmun, indépendant de tendance progressiste libérale. Surtout, l'apparition des journaux en ligne indépendants (différents des éditions électroniques des grands quotidiens) est en train de faire vaciller le monopole que détenait la presse papier en introduisant un nouveau clivage non seulement politique, mais aussi générationnel dans le monde médiatique. Philippe Pons
L'envolée des publications en ligne
Les journaux en ligne, dont l'éventail va de l'extrême gauche à la droite, ont un impact grandissant sur les Coréens de moins de quarante ans. Dans un pays où l'on compte 26 millions d'Internautes pour 45 millions d'habitants et qui est au premier rang mondial pour son taux d'équipement en connexion rapide à haut débit (10 millions d'abonnés), les portails d'information sont devenus le premier médium d'information de la population jeune. Le taux de lecture de la presse écrite est, lui, en baisse à 50,7 % en 2001, contre 57 % en 2000.
Lors de l'élection présidentielle de décembre 2002, les journaux en ligne ont joué un rôle décisif, notamment dans l'élection du président Roh Moo-Hyun. En signe de gratitude, il a accordé son premier entretien en tant que chef de l'Etat à Ohmynews, le journal en ligne le plus lu, et qu'il a ainsi consacré comme le nouveau "faiseur d'opinion". Source : Le Monde - 05/11/03
- L'ÉCONOMIE SUD-CORÉENNE TOURNE LE DOS À LA RÉCESSION
En rythme annuel, la croissance est ressortie à 2,3% au troisième trimestre et le rythme devrait s'accélérer sur la fin de l'année, estime la banque centrale.
L'économie de la Corée du sud repart de l'avant. Pour la première fois depuis le début de l'année, le pays est parvenu à afficher une croissance trimestrielle positive. Selon la banque centrale, le produit intérieur brut a en effet progressé de 1,1% au troisième trimestre par rapport aux trois mois précédents, après une baisse de 0,7% au deuxième trimestre. En glissement annuel, la croissance ressort à 2,3%. Cette performance est à mettre au crédit des exportations, qui comptent pour les deux-cinquième de l'économie sud-coréenne, en hausse de 16% selon des chiffres fournis par Bloomberg.
A l'inverse, consommation des ménages et investissement des entreprises restent à la traîne. Les Sud-Coréens ont dépensé 1,9% de moins au troisième trimestre par rapport à l'année précédente. Mais comparé au deuxième trimestre, la consommation a augmenté de 1,2%, la première hausse en un an, du fait d'une réduction des taux d'intérêt, d'une baisse des taxes sur les ventes de voiture et de plusieurs biens électroniques comme les télévisions à écrans plasma. Les investissements des groupes locaux dans de nouvelles usines et dans les équipements ont, eux, chuté de 6% sur un an, conséquence notamment des grèves ayant affecté les secteurs automobile, du transport ou encore de la chimie.
Quoi qu'il en soit, la banque centrale se dit satisfaite des chiffres de la croissance, même si cette dernière s'est avérée inférieure aux attentes (2,7% en rythme annuel en moyenne). L'institut d'émission s'attend en effet à une accélération de la croissance lors du trimestre en cours. La très bonne tenue des exportations en octobre et les performances attendues en la matière en novembre confortent notre optimisme, a confié le directeur général Cho Sung Jong. Ces propos rejoignent les prévisions évoquées la semaine dernière par le ministre des Finances, Kim Jin Pyo , à savoir un rythme de croissance de 5% en rythme annuel au premier semestre de l'année prochaine, après une hausse du PIB prévue à 3% en 2003. Cependant, les économistes sont parfois plus prudents. Certains d'entre eux s'inquiètent de la force de la monnaie, le won, néfaste à la compétitivité du pays à l'étranger. Depuis le mois d'avril, le won a augmenté de plus de 8% face au dollar. Source : Les Echos - 21/11/03
KOREA RANKS 3RD IN MARKET POTENTIAL OF EMERGING NATIONS
South Korean economy has the third biggest market potential after Hong Kong and Singapore among 24 emerging markets in the world, which are identified by U.K.-based business weekly The Economist, the Korea International Trade Association (KITA) said yesterday.
The ranking comes from an annual indicator for the market potential of emerging markets in the world, which is made by the Center for International Business Education and Research in at Michigan State University (MSU-CIBER), it added.
Eight dimensions are chosen to represent the market potential of a country over a scale of 1 to 100.
Eight criteria are market size, market growth rate, market intensity, market consumption capacity, commercial infrastructure, economic freedom, market receptivity and country risk.
In the overall market potential rank that combine those eight dimensions, Asia¡¯s fourth largest economy stood at the third marking 94 scores in a 2003 market potential ranking after Hong Kong (100) and Singapore (95). Other Asian competitors China and India were ranked in the fifth and the ninth with the indexes of 84 and 61, respectively.
When it comes to the nation¡¯s rank in the 8 dimensions, Korea stood at the top in terms of country risk. It was placed the third in the categories of market consumption capacity and commercial infrastructure.
The market size of the Korean economy is the sixth largest among 24 respondents, while the market intensity is the fourth largest. In the dimensions of economic freedom and market receptivity, Korea stood at the ninth each. Meanwhile, Korea showed the poorest ranking in terms of the market growth rate, with it being ranked the 16th.
In the same category, Malaysia stood at the top and Turkey and Mexico followed. China and India ranked 8th and 12th, respectively. The market growth rate ranking of Hong Kong and Singapore was lower than Korea down to 13th and 19th, each.
By Seo Jee-yeon Staff Reporter jyseo@koreatimes.co.kr - Source : Korea Times - 28/10/03
KOREA OUTGROWS ECONOMIC DEVELOPMENT MODEL
With this year¡¯s estimated economic growth rate pegged at 2 percent and next year¡¯s expected to dip below the growth potential level of 5 percent, there are growing concerns that the economy is not merely undergoing a cyclical downturn but entering a structural low growth stage.
Some pessimists even argue that the South Korean economy will undergo a Japanese-style long-term deflation unless the nation creates a new economic model by revamping its obsolete economic structure.
The concerns are also being backed by a number of policymakers and economists who said that the economy¡¯s growth potential has already dropped below the 5 percent level.
``Korea¡¯s growth potential is around 4 percent and that is what the government should target,¡¯¡¯ Morgan Stanley managing director Andy Xie told The Korea Times.
Xie forecast that Korea¡¯s long-term growth potential will continue on a downward spiral, affected by contracting corporate capital spending and falling labor productivity.
Earlier this year, Bank of Korea (BOK) Governor Park Seung also said the economy is entering a new era of low growth, low interest rates and low inflation, citing weak economic fundamentals caused by slowing reform and labor disputes.
Since the end of the Korean war in 1953, South Korea has created one of the world¡¯s greatest stories of rebirth by transforming a war-ravaged agrarian economy into a manufacturing powerhouse. The transformation was the result of government policies aimed at mobilizing personal savings and directing bank lending to strategic industries.
According to the BOK, following an average of 3.9 percent growth in 1950s, South Korea enjoyed high growth for nearly 40 years until the economy entered the league of advanced nations a few years ago.
The average GDP growth rate averaged 8.4 percent in 1960s, 7.4 percent in the 1970s, 8.6 percent in the 1980s and 6.2 percent in the 1990s. But it plunged to 4.7 percent during the 2000-2002 period, as the nation adhered to the old economic model despite a rapidly-changing environment.
``The key reason Japan (and now Germany) are having trouble is because their economies are not very good at changing and adapting to new times,¡¯¡¯ said Mauro F. Guillen, professor of management at the Wharton School of the University of Pennsylvania in an interview with The Korea Times.
``I think South Korea suffers from the same problem,¡¯¡¯ he added. ``The only recipe to succeed in the global economy is to be flexible and adaptive to change.¡¯¡¯
After entering a low growth phase in the 1980s, the Japanese economy has experienced a decade-long deflation _ a decline in the prices of goods and services combined with slowing growth. Japan¡¯s GDP growth stood at 1.4 percent in the 1990s and a miniscule 0.3 percent over the past three years.
There are clear signs that the Korean economy is heading into a low growth stage as Japan did a decade ago, with two core elements for economic growth _ labor supply and capital spending_ both floundering.
``Korea is now taking the same course of some industrialized nations suffering from nearly zero growth, and a reduced birth rate is coinciding with an aging society amid anemic capital spending,¡¯¡¯ Korea Institute of Finance (KIF) senior economist Park Jae-ha said.
``If this trend continues, the nation cannot help but see a significant erosion in growth potential and face another economic crisis similar to the one that occurred in late 1997,¡¯¡¯ he added.
According to the National Statistical Office (NSO), the birth rate, the average number of children that a woman gives birth to in her lifetime, fell to an all-time low of 1.17 in 2002, compared with 1.59 in the 1990s, 2.83 in the 1980s and 4.53 in the 1970s.
The rate was well below the United States (2.01), Britain (1.64) and Japan (1.32).
Of the total population, the aging population, meaning those aged over 65, accounted for 8.3 percent in 2003, up from 3.8 percent in the 1980s and 2.9 percent in the 1960s.
In its 2001 World Population Prospects, the United Nations forecast that South Korea¡¯s aging population will reach as high as 34.4 percent of the total population in 2050, fourth highest in the world, just behind Spain (37.6 percent), Japan (36.4 percent) and Italy (35.9 percent).
To make matters worse, the low birth rate-aging population trend is coinciding with a severe contraction in corporate capital spending.
The facilities investment ratio, the share of capital spending to GDP, fell to 10.4 percent in the first quarter of this year, according to the Bank of Korea.
It was the lowest level since hitting 10.3 percent in the second quarter of 1999. The ratio was 10.7 percent in 2002, 11.1 percent in 2001 and 12.7 percent in 2000.
Facilities investment grew 1.6 percent in the first quarter from a year ago, compared with the 6.8 percent expansion in 2002. It grew 35.3 percent in 2000 and 26.3 percent in 1999.
The Organization for Economic Cooperation and Development (OECD) estimated South Korea¡¯s contribution ratio of facilities investment to GDP growth stood at 7.6 percent during 1995-2002, well below Singapore¡¯s 20.5 percent and Japan¡¯s 27.8 percent during the period when per capita income ranged between $10,000-$20,000.
A number of economists and foreign business leaders suggest that given the circumstances, South Korea must revamp its outdated economic structure and create a new economic model.
``The East Asian model is based on investment and export. When low growth settles in, leaders still think in terms of investment and export,¡¯¡¯ Morgan Stanley¡¯s Xie said. ``That would cause the currency to appreciate and that causes deflation.¡¯¡¯
``If South Korea persists with its investment and export model, some sort of deflation like Japan is likely,¡¯¡¯ he added, stressing that the only way to control deflation is to run large trade surpluses, helped by the central bank keeping the currency low.
HanaAllianz Investment Trust president Eugen Loeffler also said that the biggest problem for South Korea seems to be that the old economic model of capacity growth and low-cost competition does not work any more.
``South Korea cannot compete with China on costs and China is rapidly catching up technology wise,¡¯¡¯ he said. ``Structural change and fast transition to a new business model seems to be the only viable way.¡¯¡¯
Loeffler pointed out that South Korea is still burdened by the legacies of the past development model.
Experts said that in order to boost growth potential, it is urgent not only to expand the size of the nation¡¯s service industry, but also to improve its efficiency as the manufacturing sector is fully matured.
In particular, each stressed that South Korea should focus on developing knowledge-based service industries such as telecommunications, finance, insurance and accounting.
According to the BOK, the portion of the South Korea¡¯s service industry to GDP came to 53.7 percent in 2001, well below Japan¡¯s 66.8 percent and the U.S.¡¯ 77.3 percent. South Korea¡¯s added-value ratio of the service industry was 62 percent, lower than the 64.1 percent in Japan and the 66 percent in the U.S.
The share of the manufacturing industry to GDP posted 30.5 percent in 2001, compared with 20.5 percent in Japan and 14.1 percent in the U.S.
``To succeed in the global economy, South Korea should transform the economy into a service-oriented economy,¡¯¡¯ said Wharton School¡¯s Guillen, the author of ``The Limits of Convergence,¡¯¡¯ a book on the effects of globalization and organizational changes in South Korea, Spain and Argentina since 1950.
He pointed out that the global economy is primarily a service economy and countries that do not succeed in services are doomed to fall behind.
``(South Korea¡¯s) biggest problem is over-investment in the manufacturing of commodity-type industrial products, including steel, automobiles, computers and semiconductors,¡¯¡¯ Guillen said.
``There are many other countries in the world that can make these products at low cost,¡¯¡¯ he added. ``Korea must look for higher value-added activities not just in manufacturing but also in services.¡¯¡¯
Park of the KIF shared Guillen¡¯s view, saying, ``Over-investment in the manufacturing sector and its aftermath on the economy was a key culprit behind the 1997 financial crisis.¡¯¡¯
However, BOK economic statistics department director general Cho Sung-jong stressed the need for balanced development between manufacturing and service industries, saying, ``It is not desirable to downsize all manufacturing industries en masse just to boost the service industry.¡¯¡¯
``Even with a service industry-centered economy, the country will still be able to gain growth momentum in such manufacturing industries as shipbuilding and IT where the nation maintains international competitiveness,¡¯¡¯ he added.
Management consulting firm McKinsey & Company recently warned that South Korea will be left behind by rivals like China and India unless it quickly implements reform measures in such areas as the service industry, labor-management relations and capital markets.
To sustain its current position, the firm stressed that South Korea should deregulate the service sector to increase its significance in the economy.
At the same time, it also suggested that the country needed to improve its labor-market flexibility and quality of capital markets.
Reforming the outdated education system, revamping the role of the government in the economy, and globalizing the public mindset are also recommended as key tasks.
Kim Jae-kyoung - Source : Korea Times - 26/10/03
KOREA HAS NO CHOICE BUT TO FOCUS ON TECHNOLOGY'
The government should focus only on logistics, initially, in carrying out the policy to develop Korea into the economic hub of Northeast Asia. Efforts to attain like status in financial services, information technology and others areas should be delayed, Nam Duck-woo, a former prime minister, said yesterday.
Mr. Nam, 79, now chairman of the International Business Center Forum that studies the nation's hub policy, talked with the JoongAng Daily, during the forum's two-day conference on Korea's special economic zones, which ended yesterday.
In the conference, executives from member companies of the America Chamber of Commerce, the European Union Chamber of Commerce in Korea and the Seoul Japan Club discussed the potential and problems of the special zones, which are part of the hub policy. The main feature of the zones will be tax breaks for foreign firms that locate there.
Mr. Nam was Korea's lead economic policymaker through the 1970s and the early 1980s, serving as finance minister and deputy prime minister in the Park Chung Hee administration and as prime minister in the Chun Doo-hwan administration. He played a key role in setting the model for the nation's economic growth, focusing on trade and heavy industry.
Q: At the conference, executives of foreign companies said the Korean government's regulations are obstacles to investment in Korea.
A: Though the government has relaxed many regulations, it should relax more. The procedures for permission or licensing are still complicated. For example, a company has to visit more than 10 central and local government agencies to obtain a building permit. I propose that the president order each ministry to list and report all the procedures for various permits and licenses. The president and even the minister would be astonished at the number. Then, each ministry should send the list to the Regulatory Reform Committee for consultation.
What do you think of foreign investors' concerns about labor-management relations in Korea?
Even the special economic zones have no special rules to curb violent labor movements, because the government is afraid of labor's strong resistance. In addition, the labor unions have some antipathy toward foreign investment and special zones to attract investment. So policymakers should meet with labor leaders to make them understand the mechanism that increases investment, expands employment, develops the economy and upgrades the living standard of each worker. We recently invited labor leaders to discuss these points and realized that it is not impossible to communicate with them.
Do domestic companies get any benefits from the special economic zones? Domestic companies in accordance with the government's hub policy, especially logistics companies, need to get more benefits. Korea has only a few large-scale comprehensive logistics companies, since the nation has attached less importance to the logistics business than manufacturing. But the nation should put logistics first in its Northeast Asian hub policy, considering the nation's geographical conditions and other factors. If Korea emerges as the logistics hub of Northeast Asia, then it will easily attain the hub of financial services, high-technology and other industries.
How big a problem is the increasing flight of domestic manufacturers?
There are the traditional factors of production -- land, labor and capital. When I recently visited Pudong, China, I saw foreign investors being provided with state-owned land on long-term contracts of 50 to 70 years at low rent. And the wages there were much lower than in Korea. So, the flight of domestic manufacturers to such a country with better production factors is a tide that is difficult to go against.
So Korea has no choice but to focus on technology, which is the new and important factor of production. The nation should not only nurture new high-technology industries but also develop high-end products from existing industries. For example, people say that Korea's textile industry is declining. But textile exports to China have reached $10 billion, because people like the high-end textiles with special colors and qualities from Korea. For such change, education is important.
But now Korea's educational system is in crisis. The government should recognize that point. I think the permission for foreign universities to place branches in the economic special zones would be of some help.
Domestic universities would improve in competition with the foreign universities, and Korean students would have a larger variety of colleges from which to choose.
by Moon So-young <symoon@joongang.co.kr> - Source : JoongAng daily - 20/11/03
KOREA RANKS 18TH IN INVESTMENT TABLE
Despite the political scandals, labor troubles and the North Korea threat, Korea's popularity as an investment destination has improved since last year according to a U.S. consultancy, climbing three notches to the 18th slot on a chart of 64 markets.
The Korea International Trade Association cited a recent report by U.S. consulting firm A.T. Kearney, which compiled a list of the most popular investment destinations based on a survey of executives and investment directors at the top 1,000 global companies.
"Of the 64 countries that swallow 90 percent of global foreign investment, Korea came in at 18th, up three steps from last year," a KITA official said. "But it is worthy to note that Japanese and French investors ranked Korea seventh and fourth, respectively."
According to the annual survey, foreign investors were most interested in Korea's electrical or electronics-equipment, petrochemical, insurance and real-estate fields.
China topped the chart for the second consecutive year, followed by the United States, Mexico, Poland, and Germany. Rounding out the top 10 were India, the United Kingdom, Russia, Brazil and Spain. Japan came in 15th.
Since A.T. Kearney began the survey in 1998, seeking to document leading businesses' overseas investment plans and preferred markets, Korea's ranking fluctuated from 21st in 1998 to 17th in 1999, 15th in 2000, 17th in 2001 and 21st last year.
In deciding where to invest, those surveyed said they consider government regulations as the most important factor, followed by a nation's credit standing, foreign-exchange risks, political and social stability, corporate structure and the labor culture.
As of the end of the third quarter, foreign direct investment in Korea fell 36.1 percent from last year to $4.62 billion, due to the frozen investor sentiment of multinational businesses.
Finance and Economy Minister Kim Jin-pyo, however, said last month that Korea would work to increase the proportion that FDI contributes to gross domestic product to 14 percent from the current 10 percent by 2010 by easing regulations and creating better living conditions for the expatriate community. - Source : Korea Herald - 21/11/03
RESTORE KOREA'S GOOD IMAGE, EU BUSINESSPERSONS SAY
Jerome Stoll, the vice president of the European Union Chamber of Commerce in Korea (EUCCK), said Wednesday in a luncheon meeting that South Korea should accept the current bitter situation in which foreign investments have hit bottom and more foreign companies have moved from Korea to China, due to the growth of the Chinese market. The EUCCK invited Prime Minister Goh Kun to the meeting at the Westin Chosun Hotel.
Stoll said that with South Korea¡¯s difficult economic situation, foreign investors and companies have been pondering new investment strategies. According to the vice president, member companies of the EUCCK generally consider Korea an attractive investment spot, but the problem is that the Korean government has not shown confidence in foreign investors. Stoll said that the South Korean government should ¡°pro-actively¡± push reform as soon as possible, by reducing personal debts and the non-performing loans of banks, and by improving its productivity and the labor-management relationship.
Xavier Smekens, the honorary president of the EUCCK, said that Korea earned a good image in other countries by hosting the 2002 World Cup, but the recent labor struggles have hurt the country¡¯s image. He asked Goh what efforts the government has made to restore its image. In a response, Goh said the government¡¯s principle was to resolve a labor-management discord through dialogue and negotiation, while rigidly applying the law against illegal strikes. The government would make efforts to decrease the labor-management conflicts by 50 percent a year, the prime minister said.
by Han Jae-hyeon (rookie@chosun.com) - Source: The Chosun Ilbo - 26/11/03
'KOREA MUST COPY OTHERS TO ATTRACT MORE FDI'
The new head of British American Tobacco's Korean operation has urged Korea to model the practices of other countries in order to attract more foreign direct investment into the nation.
"To attract foreign direct investment, I would advise Korea to benchmark regulations in other countries such as Taiwan and Thailand," Gottfried Thoma, the new president of BAT Korea, told local journalists during his first official press meeting in downtown Seoul yesterday. He took office as the company's president and chief executive in September.
"Korea should compare its tax incentives with those of other countries and have competitive advantage in attracting foreign direct investment."
According to the BAT Korea chief, foreign direct investment in Korea totaled a mere $143 million in 1980 but surged to $15.2 billion in 2000.
"Many people are discouraged because foreign direct investment in Korea fell in 2001 and 2002," he said. "But that decline took place in many other countries around the world, not just in Korea, because of the burst of technology bubbles."
The German-born businessman noted that Korea has many things to offer foreign investors, including its market of 47 million people, per-capita income of more than $10,000, its high education level, advanced technology and good infrastructure.
"In a nutshell, Korea should benchmark what other countries are doing and communicate its competitive advantage to foreign investors."
Thoma recommended that Korea utilize success stories like BAT Korea to convey a positive image to foreign investors, letting them know how the company made a successful investment and enjoyed support from the central and provincial governments.
He added that Korea was a very important and strategic market for BAT Group, one of the world's largest manufacturers of tobacco products.
"BAT Korea has achieved remarkable growth in Korea, reaching a 14-percent market share as of October, compared with less than 1 percent three to four years ago," Thoma said.
Based on the proven potential of Korea, he mentioned, BAT invested over $2 billion to build a factory in Sacheon, South Gyeongsang Province, last year. The factory, which produces Dunhill cigarettes, the nation's top-selling tobacco brand, employs about 1,000 people and plans to hire 100 more workers over the next several months, according to the tobacco company.
BAT Korea aims to raise its share of the domestic market to 20 percent by 2006 and to become the No. 1 tobacco company in Korea by 2012 by continuing to invest in the country in line with the company's performance.
Asked about the Ministry of Health and Welfare's move to raise taxes on cigarettes, Thoma noted, "Cigarette prices in Korea are still at a low end, compared with those of other countries. So there is room for price increases, but the government should figure out an appropriate level of price increase that would not have a negative impact on the economy and low-income people."
He added that BAT Korea would support a price increase, rather than a hike in excise tax, which the Health and Welfare Ministry is pursuing.
Thoma said he smokes two or three packs of cigarettes per day and is trying to cut down on smoking.
He also advised Korean consumers to be aware of the health risks posed by smoking.
"Don't smoke in the first place. But if you do, do it moderately." (simonkim@heraldm.com) - Source : Korea Herald - 14/11/03
"INVEST KOREA" HERALDS A NEW INVESTMENT REGIME
The rebranding of Korea's prime investment promotion portal is just one step toward a total overhaul of the national investment environment including expanded tax breaks and cash grants for investors
Korea's premier investment promotion agency (IPA) will be known as Invest Korea from November 17th as part of new measures to make new gains in the international market for foreign direct investment (FDI). At the forefront of Korea's FDI effort for five years, the rebranding of the Korea Investment Service Center (KISC) as Invest Korea heralds a new, more aggressive and pro-active stance by Korea in attracting global capital flows. Specifically, the ¡°Comprehensive Measures to Attract Foreign Direct Investment¡± announced at a Sept. 2nd cabinet meeting are designed to boost Korea's range of investment incentives to a level far superior than those of its competitors on annual incremental basis.
Prime among the measures is the launch of Invest Korea, as the investment promotion arm of the Korea Trade-Investment Promotion Agency (KOTRA), now imbued with a strengthened organizational structure and array of functions as compared to its antecedent, KISC.
In addition, the already generous benefits offered to foreign investors will be expanded and in fact complemented by a system of cash grants.
The measures are the conception of the Ministry of Commerce, Industry and Energy (MOCIE), and were arrived in close consultation with key players within government and the foreign business community.
On the government side, this included lengthy cabinet level discussions, and meetings with the Presidential Northeast Asian Business Hub Committee. MOCIE consulted with associated government ministries such as the Ministry of Finance and Economy (MOFE) and the Ministry of Planning and Budget.
In regard to foreign business, MOCIE solicited the opinions of bodies such as the American Chamber of Commerce in Korea (AMCHAM), the European Union Chamber of Commerce in Korea (EUCCK), the Seoul-Japan Club, and the Canadian Chamber of Commerce.
Any legal changes required to implement the measures were made in a revision to the Foreign Investment Promotion Act decided upon at the Sept. 2nd meeting.
Why are these Major Regime Changes being Made Now?
FDI flows have declined worldwide due to the global economic downturn and a drop in M&A investment. FDI into Korea has been on a downward trend since 2000, one that has been especially precipitous this year due to labor unrest and a weak economy.
FDI inflows in Korea for the first nine months of 2003 decreased by $2.6 billion, or 36.1 percent from the same period of the previous year.
By region, inflows from the European Union and Asian countries increased while those from the United States dropped.
By sector, FDI inflows into the service sector fell more rapidly than into the manufacturing sector, while by type of investment, a significant portion of FDI (83.7 percent) into Korea occurred through purchases of new shares.
Total FDI inflows in Korea over the past five years amounted to $34.8 billion and contributed enormously to foreign exchange stabilization and gross fixed capital formation. In 2001, FDI accounted for 14.8 percent of sales in manufacturing (86.6 trillion won) and for 8.3 percent of employment (219,000 jobs). Moreover, FDI is accredited with playing a pivotal role in pulling Korea out of the 1997/98 financial crisis.
There is the perception that FDI will play an important role in developing Korea as the economic hub of Northeast Asia, one of the initiatives of the participatory government of President Roh, Moo-Hyun, as well as fostering the growth industries of the future. However, FDI inflows in Korea are markedly low in comparison with those of Korea's major rivals For example, in 2001, inward FDI stock in Britain amounted to 40 percent of a of GDP, in France, 23 percent, Canada, 36 percent, and Spain, 68 percent. Meanwhile, Korea's FDI stock as a share of GDP in 2002 was a mere 9.2 percent.
What's New on the Table by Way of Incentives?
The government, therefore, believes that it is urgent to improve the national investment environment and strengthen incentives in order to encourage foreign investors to view Korea as an attractive market.
The key features of the measures are as follows. (For a more detailed overview, see the appendix at the end of this article).
Cash Grants
The central government will refund foreign investors a certain percentage of their investment in any given project, the precise amount to be arrived at through negotiation. Cash grants will be offered for investments in high technology industries of more than $10 million, an investment in high-tech parts and materials industries of more than $10 million, and investments in R&D facilities of more than $5 million, in consideration of the impact such investments will have on the Korean economy through technology transfer and job creation. Cash grants are a universally used method in Europe to attract FDI.
Eased Requirements for Tax Relief
The government has already relaxed the requirements for the designation of Foreign Investment Zones, in which financial aid and tax breaks are offered to locating foreign invested companies. As of January 2004, the minimum volume of investment required for relief on corporation tax in Foreign Investment Zones will be reduced from $50 million to $30 million in manufacturing, from $30 million to $20 million in tourism projects, and from $30 million to $10 million in the logistics industry. Meanwhile, the period of corporation tax relief will be reduced from 10 years to seven years, the same as Korea's major regional rivals. The reduction of the tax holiday period will take effect in 2005, with a one-year grace period.
Previously, Free Trade Zones, Duty Free Zones and Free Economic Zones each had different tax relief regimes that have since been unified and simplified. In this simplified regime, a foreign company that makes an investment of more than $10 million in manufacturing will be offered corporation tax relief, regardless of whether the company is located in a Free Trade, Duty Free, or Free Economic Zone, and it can also enjoy benefits in terms of tax relief on local taxes and customs duties equivalent to those available in Free Economic Zones.
The government will also improve the tax situation for individual foreign workers, including foreign engineers, in foreign-invested companies. (See appendix). As of next year, a multinational company's contributions to a nonprofit educational foundation for the expansion or construction of school buildings, their contributions will be recognized as expenses for which the donors will be entitled to a 50-percent income tax deduction.
Will the Living Environment Improve?
The government plans improve the business and living environment for foreign investors by offering financial support on a matching basis from foreign corporates for foreign-exclusive facilities including schools and hospitals. Moreover, national or public properties can now be rented or sold to those who want to operate such facilities, with the added benefit of reduced rentals, installment payments or purchase prices. In addition, by reducing rentals for foreign-invested companies in privately developed industrial complexes, the government, is in effect, allowing foreign companies to have more choice in terms of location.
What Motivation is there on the Korean Side to Attract Investment?
Heads of local governments and government-invested organizations will be allowed to reward public servants and employees of Invest Korea or consulting firms in proportion to their accomplishments in attracting foreign investment. This is a particularly significant incentive since it means that foreign consulting firms and investment banks responsible for large-scale FDI projects can receive fees for their investment-attraction efforts commensurate with international levels.
The government has presented a revision of the Foreign Investment Promotion Act and a revision of the Special Tax Treatment Control Act embodying the above features to the National Assembly. If these revisions receive ascent, they would take effect from January 2004.
What Systemic Changes are Planned to Enhance the Investment Environment?
The Korean investment environment has improved greatly but not to the satisfaction of the entire foreign investment community. Aware of these concerns, the government sees enhancement of the investment environment as a priority.
To sustain improvements in the business and living environments the hub project committee and MOCIE will establish a taskforce consisting of heads of related ministries and foreign-invested companies to set priorities and formulate a series of detailed yearly action plans by the end of 2003. The plans will focus on enhancing labor management relations, alleviating tax burdens and deregulating financial and foreign exchange systems.
This latter move has been prompted by the government's awareness of the difficulties faced by foreign invested companies in executing financial and foreign exchange transactions. In order to provide them with easier access to domestic financial institutions, the government has instructed credit guarantee organizations to consider the financial standing of their parent company overseas in rating their credit worthiness. It has also allowed foreign-invested companies that have invested more than $10 million to report their foreign exchange transactions with their headquarters to the bank with which they have an account, instead of reporting to the Bank of Korea.
What about Labor?
The government is putting particular focus on preventing and resolving instances of labor unrest, a topic that is now of major concern to foreign investors. The Ministry of Labor, the National Police Agency, and the Public Prosecutors¡¯ Office will dedicate some of their most able officials to pursue this most urgent task. The system will work like this: when a foreign-invested company reports a labor dispute to Invest Korea, it will immediately inform the above government agencies who will respond by sending their dedicated officials to the foreign-invested company experiencing the dispute. Invest Korea will dispatch its labor specialists where they will work out measures to resolve the conflict in conjunction with their government colleagues ¡°on the ground.¡±
To strengthen its capability in responding to labor unrest, a labor counseling team will be established within Invest Korea, a part of which will be staffed by Ministry of Labor officials. Seminars for CEOs of foreign invested companies will be held to help them better understand Korean labor practices and communicate with their workforces.
As well as initiatives to build labor harmony, it behooves the government to take appropriate steps to provide a comfortable living environment for foreign corporate personnel and their families.
What will be Done to Improve the Availability of Foreign Schooling?
Since good foreign schooling is a vital to attract foreign personnel with families, the government plans to construct a multinational school (refer to artist's representation) on the site of Sudo Girls' High School in Yongsan, Seoul. Meanwhile, government is constructing a foreign school in the Jinsa Industrial Park in South Gyeongsang Province in order to provide education for the children of foreign workers in this part of the country. It also plans to increase aid to existing foreign schools to enable them to provide a better range of services.
Furthermore, on Oct. 7th 2003, the MOCIE formed a taskforce charged with devising a 5-year plan to enhance the living environment for foreigners. The first meeting of the taskforce was held with representatives of foreign business organizations including AMCHAM and EUCCK, as well as related government and private institutions. Participants at this first meeting set 50 priorities categorized as to six topics that varied from education to health care and housing to culture and leisure (See table below).
PRIORITIES OF THE TASKFORCE ON ENHANCING THE LIVING ENVIRONMENT FOR FOREIGN PERSONNEL
· Education : nine priorities including regulations on the establishment and operation of foreign schools· Health care : six priorities including designation of clinics for foreigners· Housing : Seven priorities including introduction of a standard lease contact· Transportation : 10 priorities including the maintenance of roads signs· Immigration procedures : 7 priorities including favored treatment in visa application· Culture and Leisure : 11 priorities including establishment of cultural information centersFor each subject area, a working group will be formed to devise appropriate action programs
What's Being Done to Improve Administrative Services for Investors?
Perhaps the most visible aspect of the government's intensified drive to improve the domestic investment environment is the Invest Korea Plaza project. Now under construction in Yeomgok-dong, southern Seoul, and adjacent to the KOTRA Building, the 12,700-square meter plaza will provide a one-stop service to deal with a variety issues faced by foreigners, including educational and housing problems. Under the one-stop service delivery system, foreign executives need contact only a single project manager to access services ranging from investment counseling to applications for approval. A single project manager will provide support at every stage of an investment from business plan consultation to obtaining all necessary approvals.
In a radical departure from the usual hiring practices within the Korean government, the chief post of Invest Korea will be open to foreigners. Additional industrial experts will be taken on to its staff and more public servants from associated agencies and ministries will be seconded to the agency.
Also, the government will relaunch the Cyber KISC Internet portal site for foreign investors as Cyber Invest Korea, through which Invest Korea will offer comprehensive investment information by networking with government ministries, local governments and financial institutions. On-line approvals can be granted through the site. Invest Korea will offer services to foreign investors in a systematic way by establishing liaison offices in the Free Economic Zones to be established in Incheon, Busan and Gwangyang.
In addition to providing a one-stop service to foreign investors through the project management system, Invest Korea will utilize investor-friendly marketing strategies to spur FDI flows into Korea. To this end, KOTRA's major Korea Trade Centers. Some 37 in all will engage local experts, including lawyers and accountants, and work with local branches of international consulting firms to improve foreign investors¡¯ access to information on investment opportunities in Korea.
Is the President On Board with this New Approach?
At the forefront of the national effort to make Korea a more attractive investment destination is President Roh Moo-hyun who has expressed his intention to foreign investors to resolve such issues of concern as the nuclear challenge from North Korea and labor unrest. In this connection, the president has recently met with a number of high profile foreign CEOs, including Craig Barrett of Intel and Meg Whitman of e-Bay. Furthermore he has called upon on public servants responsible for FDI promotion to create a more foreigner-friendly environment.
By themselves, the Comprehensive Measures to Attract Foreign Direct Investment will not be sufficient to reverse the downward trend in FDI inflows into Korea. This will only be possible by dramatically improving the national investment environment, a matter of which the government is only too well aware. To begin with, as the world's 12th largest economy, Korea should demonstrate that it is making sincere efforts to enhance transparency in corporate management.
To do so, the government will identify issues that require social consensus for their resolution, including the establishment of a more cooperative model of labor/management relations as the government's major priorities. It will also embark upon a dramatic program of reform in all those areas that Korea lags the advanced economies, from management transparency to living environment.
For the government's efforts to attract FDI to be successful, Koreans should adopt a more open mindset while officials within government ministries, agencies and local governments should take to heart the spirit of the administration's intentions and be pro-active in helping foreign business find a true home in Korea.
By Sul Young-Lok(sy10429@mocie.go.kr) Deputy Director, Foreign Investment Policy Division Ministry of Commerce, Industry & Energy
Changes in Tax System for Foreign Investors
Subject Present Revised Date Effective
Earned income tax for foreigners (clause 2, article 18 of special Tax Treatment Control Act)
Income tax imposed on earned income of foreigner executives and workers Foreign executives/workers subject to same taxation system as Korean nationals, [Total amount of income-non-taxable income-amount of income tax deduction]x basic tax rate (9%-36%) Choice between 1) and 2)1) Flat rate of 17% on total income2) Present taxation system, where basic tax rate (9%-36%) applied after total tax deductions Revised taxation system will apply from Jan 1st 2004
Non-taxable income Foreign service allowance, within 40% of basic pay Foreign service allowance, within 30% of total income
Extend 5 year income tax exemption for wages and salaries of foreign engineers (end 2003 to end 2006)
Corporation tax reduction and exemption of Foreign Investment Zones, Free Trade Zones, Duty Free Zones and free Economic Zones (clause 2, article 116 of special Tax Treatment Control Act)
Foreign Investment Zones 10 year exemption/reductionManufacturing : US $ 50 millionTourism : US $ 30 millionLogistics : US $ 30 million 7 year exemption/reductionManufacturing : US $ 30 millionTourism : US $ 20 millionLogistics : US $ 10 million Changes in minimum investment volume tax reduction and exemption will be applied from Jan 1st 2004.Changes in the periods for tax reduction and exemption will apply from Jan 1st 2005.
Free Trade Zones and Duty Free Zones 10 year exemption/reductionManufacturing : US $ 30 millionLogistics : US $ 30 million 5 year exemption/reductionManufacturing : US $ 10 millionTourism : US $ 10 millionLogistics : US $ 5 million
Free Economic Zones 5 year exemption/reductionManufacturing : US $ 10 millionTourism : US $ 10 millionLogistics : US $ 5 million
10 year tax reduction and exemption : 100% for 7 years and 50% for 3 years7 year tax reduction and exemption : 100% for 5 years and 50% for 2 years5 year tax reduction and exemption : 100% for 3 years and 50% for 2 years
Allowance of contributions to non profit educational foundations as expenses (Article 73 of the Special Tax Treatment Control Act)
Up to 50% treated as expenses Contributions to private schools, including foreign schools and polytechnic colleges Contributions to non-profit educational foundations for purposes of expansion/construction of private schools, including foreign schools This revised provision will apply from Jan 1st 2004
Period To Dec 31st 2003 To Dec 31st 2006 - Source KT&I - novembre- décembre 2003
IMPROVED INCENTIVES TO STIMULATE FDI
Many countries around the globe are striving to bolster their foreign direct investment promotion systems and increase investment inflows by undertaking a variety of efforts such as offering expanded incentives. The competition between these countries - in particular, countries in the world's fastest growing region of Asia - is heating up, as the race to attract foreign investment intensifies amidst stagnant investment flows worldwide.
Any potential investor needs to be aware of the available benefits and incentives for which he may be eligible in order to avoid any unnecessary disadvantages and to lower the costs of operating in a foreign country. The Ministry of Commerce, Industry and Energy has recently announced various attractive incentives for foreign investors in line with government policies aimed at improving the overall investment environment.
First, tax reductions are available for foreign-invested companies located in designated foreign-investment zones. In order to allow even more investors to take advantage of this benefit, the conditions and requirements for eligibility have been relaxed.
In particular, the required invested capital in the manufacturing sector has been slashed from $50 million to $30 million. In the case of the tourism and resort industry, the minimum investment has been lowered from $30 million to $20 million. And in the case of the logistics sector, the required investment has been cut from $30 million to $10 million. However, the period for which the tax reductions can be received has been shortened from 10 years to seven years.
Furthermore, the tax incentive systems for the nation's free-trade areas and free economic zones have been unified for equal application of tax rates. The required investment amount was sharply reduced from $30 million to $10 million for the manufacturing industry, and the reduction is granted for a period of five years (a 100 percent reduction for three years and a 50 percent reduction for the next two years).
Meanwhile, a single income tax rate of 17 percent is being applied to the total wages of all foreign employees. With the introduction of this new regulation, not only is the tax burden reduced but the tax payment process is simplified as well.
Second, the benefits offered to foreign investors concerning the leasing of property and land have been expanded. For example, the conditions to designate foreign investment zones were deregulated so that instead of one company having to invest a minimum of $50 million, more than one company can now jointly make an investment of $30 million to become eligible for property incentives. Furthermore, exclusive complexes for foreign-invested companies, in which a 75 percent to 100 percent reduction in lease payments is available, will be expanded in terms of their area so that more companies have the option to settle down in such zones.
Third, a cash-grant system is being considered for investments of at least $10 million in the high-tech industry following an amendment to the Foreign Investment Promotion Act. The grants will be offered to exceptional cases of new and additional investments in factory establishment or expansion. The high-tech industry classification includes businesses accompanied by high technology, industry-supporting service businesses, companies investing in research and development facilities and professional companies engaged in the parts and materials sector.
Fourth, Korea Investment Service Center, the country's designated one-stop service center for foreign investment support, has been renamed "Invest KOREA" and will be expanded within the year as a full-fledged institution serving all foreign investor needs. Commencement of construction on a separate facility, Invest KOREA Plaza, which will serve as the central service center for support of all business activities of foreign-invested companies is slated for early next year.
In addition to the various benefits and support measures mentioned above, many other improvements to the present system are currently under consideration such as financial support for large-scale social-overhead-capital projects as well as deregulation of the tourism industry. Such continued introduction of incentives is expected to improve the overall attractiveness of the business environment for foreign investors and jumpstart Korea's recent sluggish FDI performance.
By Cho Tai-hyoung
The writer is the director of the Investment Consulting Team at Korea Investment Service Center. He can be contacted at (02) 3460-7550. - - Source : Korea Herald - 20/11/03
MINISTERS SEEK WAYS TO LURE FOREIGN DIRECT INVESTMENT
The government held a meeting of economic ministers at the Bankers Club in downtown Seoul yesterday to discuss several pending issues facing the nation.
Sources said that the participants in the closed-door meeting, chaired by Minister of Finance and Economy Kim Jin-pyo, exchanged opinions on ways to lure more foreign direct investment to reinvigorate the local economy.
They are also said to have discussed how to develop the local agriculture sector to prepare for a more open global market environment.
On the real-estate speculation issue, Kim told reporters after the meeting, "Once the speculative demand disappears, the property prices will drop, following market principles."
He, however, cautioned that it might take time for the effects to be felt.
Also present were Planning and Budget Minister Park Bong-heum, Commerce Minister Yoon Jin-sik and other high-ranking government officials.
A Finance Ministry official said the meeting was organized to review current pending issues and exchange opinions, and not for finalizing any government's policies.
(kokobj74@heraldm.com) - Source : Korea Herald - 08/11/03
TAX REVISION FOCUSES ON LURING INVESTMENT
Korea plans to broaden tax breaks and other incentives to attract more foreign direct investment, beginning next year, in line with its ambition to transform the nation into a business hub of northeast Asia, the government said yesterday.
According to a set of income tax revisions laid out by the Ministry of Finance and Economy, the government will also provide tax benefits for local farmers and fishermen to help boost their competitiveness in the run-up to implementing free-trade agreements.
The measures, which are subject to Cabinet approval and expected to take effect in Jan. 2004, focus on making it easier for foreign investors to receive tax benefits.
Any foreign investment worth $30 million or more in the manufacturing sector will now be eligible for tax breaks, while the current floor is $50 million.
In the logistics sector, the minimum level will be lowered from $30 million to $10 million.
Similarly, foreign investment exceeding $20 million in the tourism sector will benefit from tax breaks under the revisions, against the current floor of $30 million.
Any area where the combined foreign investment tops more than $30 million will be designated as a foreign-investment region. The foreign investors in the region will be eligible for exemption from corporate and income tax for seven years and a tax reduction of 50 percent in the following three years.
Tax favors will be also provided for outside investment on local social-overhead-capital projects that are valued at $10 million or more.
The ministry noted that foreigners would have three years of tax exemption and two years of reduced taxes on their investment in free economic zones. In the manufacturing or tourism sectors, the amount of investment eligible for the tax favors would be $10 million, while the figure for the logistics sector would be lowered to $5 million.
On the domestic front, the proposal said that local small- and medium-sized companies in highly populated areas in and around Seoul would get tax deductions on their additional investment there, as long as they do not expand their facility sites.
Also, the revised rules extended the list of second jobs subject to tax exemption for local farmers and fishermen. The measure was designed to encourage local farmers and fishermen to nurture more alternative income sources to improve their livelihood in the run-up to competiting with cheap foreign produce.
Tax exemptions will be granted for income of up to 12 million won earned from alternative work such as running restaurants, selling alcohol or producing herbal beverages, the ministry noted. In order to enhance the transparency of business trading, local companies are required to keep the receipts of their tax payments or credit card use exceeding 50,000 won, which was lowered from the current 100,000 won floor.
By Koh Byung-joon (kokobj74@heraldm.com) - Source : Korea Herald - 27/11/03
IN SOUTH KOREA, BEING 'TOO OLD, TOO EXPERIENCED' CAN POSE PROBLEMS FINDING WORK
Uemployment: Profiles in courage
Kim Kyu Ho lost his job as a manager in a regional office of a large South Korean bank two years ago when the bank reduced the number of its branches and asked him to move to another city more than 160 kilometers away.
"I had my two children in school, and my wife had a job at local school," Kim said. "I didn't want to move. I believed that I could find similar work near my home."
In a time of economic slowdown, Kim has found the prospects considerably more difficult than anticipated.
"I didn't work for eight months," said Kim, who has a degree in business. "I'm 46 already. People said I was too old, too experienced."
Kim eventually found a temporary job at a small finance company for about two-thirds of his previous salary, which was about $50,000 a year, including benefits and annual bonus.
After several more months of looking, he went to work in March for a real estate company, where he uses his banking expertise to advise and assist in obtaining mortgages - but, again, at a pay considerably below his previous earnings.
"It's a tough economy," Kim said. "The government's unemployment figures look low, but they don't cover a lot of people who are only working a few hours a week or earning much less than they used to."
In fact, the latest statistics show unemployment in South Korea at 3.3 percent in August, down a tenth of a percentage point from July.
The Finance Ministry acknowledges that the figures are slightly skewed because fewer young people are looking for work while going to college and thousands of others have stopped looking. In hard figures, 22,126,000 South Koreans had jobs in August, down 33,000 from July.
For Kim, the rising prices means he hardly has enough to spend on private tutors for his children, the elder in the second year of high school, the younger in the last year of elementary school.
Luckily, however, he owns an apartment that he bought at a relatively low price five years ago in one of the new high-rises that dominate the skyline of Seoul and every Korean city. If the economy improves and he finds a better-paying job, he would like to save money to buy another apartment as a rental property. Typically, the value of the apartments of middle-class South Koreans like Kim has risen 30 percent to 40 percent in the past three years.
For Kim to recover sufficiently to reach the stage of investing in real estate, however, will be a daunting challenge.
"I lost a lot of money in the stock market last year," he said, when South Korea's benchmark stock index, the Kospi, went below 500 points, "but lately it's been looking up somewhat." (On Friday, the Kospi closed at 748.17.) "I keep some stocks in companies that seem safe, like Samsung Electronics, but you can't be sure of anything. Share prices in some of the biggest companies have gone down, and many others are stagnant."
Kim tries to resolve the problem by investing in funds operated by investment trust management companies, the South Korean equivalent of mutual funds.
"I go to an investment adviser at my bank," he said. "The funds I'm in have made some small profits, though of course they're closely related to the stock market."
Kim and his wife, Min Sook, a primary school teacher, have two life insurance policies and one health insurance policy, but they are thinking of canceling the health insurance and cashing in one of the life policies. Lack of health insurance, while a gamble, does not represent quite the same risks as in the West since the cost of routine care, including hospital stays, adds up on average to one-tenth of that in the United States.
"We need the money for tutors," Kim said. "It will be impossible for my children to get into a good university without tutoring. Every family I know has to have tutoring."
For many South Koreans, the temptation is to go into debt with the help of multiple credit cards and generous loans extended by most banks.
The average young person in South Korea holds four to six credit cards, and young people are in the habit of borrowing cash with one card to pay off another. The banks offer "minus loans" loans that are automatically extended as long as the customer remains within a specified limit.
Banks also routinely roll over mortgages, most of them three-year deals in which the homeowner pays the interest but no principal.
One result as of last June was an astounding nonperforming loan ratio of 12.14 percent on credit card loans, compared with 1.88 percent on household loans, including mortgages. The contrast reflects both the ease of obtaining credit cards and the loose repayment requirements on bank loans.
Kim and his wife carry eight credit cards between them, constantly juggling cash withdrawals against payments, and have taken out a bank loan of about $20,000 that they do not plan to repay soon.
Kim is not optimistic about pulling out of the financial morass.
"Companies hardly hire people my age, and young people are finding it difficult to get jobs, too," he said.
"We are waiting for the economy to improve, but much depends on the rest of the world. Sometimes we feel powerless."
In a Confucian society still dominated by hierarchical family loyalties and values, Kim and his wife count on the support of an extended family.
"It is only in recent years that Korea got so prosperous," he said.
"We are used to hardship. We need our family and friends to survive."
Don Kirk IHT - Source : International Herald Tribune - 25/10/03
BUSINESS LEADERS SAY KOREA MUST IMPROVE UNION RELATIONS
In a bid to lure more foreign capital, Korea must improve its investment environment by improving labor-management relations, the Korean CEO's Association of Multinational Corporations said on Wednesday during a meeting in Seoul.
The executives said that excessive wage demands, on top of sour labor-management relations, are undermining Korea's investment environment as well as its competitiveness in the global arena.
To improve the situation, they suggested that the government establish a task force to deal with labor disputes, and designate special economic zones as "industrial action free" areas.
Source : The Chosun Ilbo - 06/11/03
LABOR URGED TO RESCIND STRIKE PLANS
Leaders of Korea's five major business organizations yesterday called on labor activists to withdraw their plans to stage strikes.
The Korean Confederation of Trade Unions, the nation's second-largest umbrella labor group, is planning a partial walkout Thursday and a general strike next Wednesday, to press for a change in legal provisions on strike and damages lawsuits, which it claims suppress labor activities.
"The plan to launch nationwide strikes will further deteriorate businesslabor relations. The right to file damages lawsuits over illegal strikes is a defensive means for employers," the five groups said in the joint statement.
"If unions go on strikes calling for changes in laws and for other political reasons, those walkouts are apparently illegal and should be subject to punishment," they said.
Present at the news conference in Lotte Hotel in downtown Seoul were representatives of the Korea Chamber of Commerce & Industry, the Federation of Korean Industries, the Korea Federation of Small and Medium Business, the Korea Employers Federation and the Korea International Trade Association.
By Kim Sung-mi (smkim@heraldm.com) -Source : Korea Herald - 04/11/03
STRIKE-FREE INVESTMENT REGIONS PROPOSED
A government official has proposed creating a region in one of the nation's proposed free economic zones where all ¡°union-management strike¡± would be prohibited for a certain period, in order to attract more foreign investment.
At a conference hosted by the KCMC, an association for Korean chief executives at foreign companies, Kim Wan-soon, the ombudsperson for foreign investment affairs at KOTRA, the state investment and trade promotion agency, said Wednesday that the country should set up a dispute-free zone in the free economic zone because the hostile relationship between unions and management and the union's excessive demands for wag increases have been undermining the country's investment environment.
Kim said that there have been 30 cases so far this year of union-management disputes, the largest number in three years. There were only 20 cases in 2001.
In the conference, William Oberlin, the president of the American Chamber of Commerce in Korea, said that the lack of labor-market flexibility and the steep hike in wages has shot down Korea's global competitiveness. He said that foreign firms often had problems with their operations in Korea because the government's investment regulations change frequently, leaving foreign investors in the dark.
Marcos Gomez, the president of the European Union Chamber of Commerce in Korea (EUCCK), said that because China would within the next five years be able to make products of roughly the same quality as those by Korea, he recommended that Korea should aggressively invest in research and design.
by Song Eui-dal (edsong@chosun.com) - Source : The Chosun Ilbo - 05/11/03
FINANCIAL REVAMP GAINS SPEED - SEOUL SPURS RESTRUCTURING OF NONBANK FIRMS
The restructuring of troubled nonbanking financial service companies is gaining speed.
A senior official at the Financial Supervisory Commission said yesterday that the agency is in the final stage of its ongoing negotiations with Prudential Financial Inc. on the sale of Hyundai Investment and Securities Co., which has received bailout funds from the government.
¡°We will report the progress of the talks to the Public Fund Oversight Committee this week,¡± he said. ¡°A final contract is likely to be signed next month.¡±
The U.S.-based financial services firm signed a non-binding preliminary agreement to buy for $400 million an 80 percent stake in the debt-ridden brokerage house, which is a former investment trust company.
Prudential is also negotiating with CJ Corp., the largest shareholder in CJ Investment and Securities Co., to purchase a controlling stake in the troubled brokerage house.
The U.S. company recently said that it was considering merging the two Korean brokerage houses in the long run.
The Financial Supervisory Commission official said that, after the sale of Hyundai Investment, the government would restructure the other troubled brokerage houses converted from investment trust firms ¡ª Korea Investment and Securities Co., Daehan Investment and Securities Co. and Tong Yang Orion Investment Securities Co.
According to the official, the leader of Tong Yang Group, Hyun Jae-hyun, recently met with Lee Jung-jae, the chairman of the commission, to ask for public funds to normalize the operations of the troubled brokerage unit.
The government said last month it planned to pump about 3 trillion won ($2.6 billion) into Korea Investment and Daehan Investment to normalize their operations and then sell them.
Some credit card companies suffering from rising overdue debts and insurers are also restructuring through mergers and acquisitions.
Kookmin Credit Card Co. was merged with the credit card division of its parent company, Kookmin Bank, at the end of last month.
And some executives of Woori Finance Holding Co. are reportedly considering merging Woori Credit Card Co. with Woori Bank.
Daishin Life Insurance Co. was taken over by Green Cross Co., a pharmaceutical company, in June. And Hanil Life Insurance Co. is likely to be sold to Kookmin Bank.
by Lim Bong-soo <symoon@joongang.co.kr> - Source : JoongAng Daily - 28/10/03
DEUTSCHE BANK GAINING NAME IN CORPORATE FINANCE
Koreans are notorious for their predilection for brand names. And in the domestic investment-banking sector, names like Goldman Sachs and Morgan Stanley had enough cachet to help open doors and get deals signed.
By contrast, up until two years ago, Deutsche Bank was decidedly a no name in investment banking here. It barely registered deals, and it would be fair to say that its name did not spring up among companies considering corporate finance options.
All that changed when Deutsche recruited Ahn Sung-eun from Salomon Smith Barney in April last year to head its global corporate finance office in Seoul, and rebuilt a team with the intention of giving the top banks some real competition.
"Deutsche was not fully recognized as an investment bank (in Korea)," said Ahn during an interview with The Korea Herald. "People's perceptions were that it was more of a commercial bank. The difficulty we had in the first six months was to change perceptions that Deutsche was a global investment banking firm."
The goal was part of Deutsche's global drive to re-introduce itself as an investment banking force to complement its traditional strength in fixed income and derivatives. In the Asia Pacific region, the efforts seem to have been successful. According to data kept by Bloomberg, Deutsche was ranked second in its merger and acquisition advisory rankings in the region in terms of the size of deals in the year to date.
However, the quick ascendancy of Deutsche has also raised criticism from other investment bankers that the German bank undercuts its fees in order to gain business, a charge vehemently denied by Deutsche's top brass.
As far as Korea is concerned, Ahn points out that the charges are also without merit. "We focus purely on our professional advisory capabilities when getting advisory deals," he noted.
In the domestic markets, Deutsche has particularly made its mark in equity-linked securities deals, in which it has become the top investment bank this year, co-managing two of the only three deals conducted this year after managing none in 2002.
Its POSCO deal particularly stands out as the first Euro-yen equity-linked transaction ever conducted in Asia, or yen-denominated securities issued by a non-Japanese company.
Korea's largest steelmaker sold 51.9 billion yen ($437 million) of five-year bonds convertible into shares of SK Telecom in mid-August, thus selling 2 percent of its 6.83-percent stake in the telecommunications company. The bonds were convertible into shares at a 58-percent premium over the value of SK Telecom's American depositary shares.
The success of the transaction, with twice the demand for each supply, emboldened Deutsche Bank to try it again in mid-October with the Korea Electronic Power Corp., Korea's national electric utility.
Deutsche helped the nation's electric utility sell 28.1 billion yen of five-year bonds that were convertible into KEPCO's stock. The securities were issued at the lowest yield ever out of Asia.
In advisory, Deutsche was involved in coming up with the 4.9 trillion won ($4 billion) rescue deal for beleaguered Hynix Semiconductor Inc. and approved by its creditors late last year. Creditors agreed to swap 1.9 trillion won of debt into equity and extend payments on 3 trillion won of debt.
This year, Ahn said that Deutsche is currently involved in several ongoing transactions, which he estimated at a combined $8 billion and enough to rank it among the top three in Korea. However, he declined to provide details.
Ahn said that he is content with what his team has accomplished this year, despite what has been a very slow year in deals, with companies reluctant to make big investments or faced with little need for refinancing.
But Ahn said he's clear on where Deutsche is going at least by 2005.
"Absolutely our goal is to be the top investment bank in Korea, not only in terms of size and number of deals but also in quality of advice we provide," he said. "Our team here is relatively new, so we really need to differentiate ourselves in terms of our service. The bottom line is that we need to have integrity and provide advice that is custom tailored and adds value."
By Rafael Nam (rafaelnam@heraldm.com)
Source : Korea Herald - 14/11/03
KOREA FIRST CEO DENIES ACQUISITION RUMORS
Robert Cohen, CEO of Korea First Bank (KFB), met on Wednesday with an official of the Financial Supervisory Service (FSS), the financial-market regulator, and said the Financial Times' recent report on HSBC's planned acquisition of KFB is false, sources said that day.
HSBC, the world's second largest bank, is looking for opportunities to take over a retail bank in Korea and has already inquired into possible target banks, the Financial Times (FT) reported Sunday. The newspaper cited investment bankers in Seoul as the sources for the report.
An official of the Korean bank said Wednesday that Cohen met Kim Jung-hoi, vice chairman of the FSS and told Kim the FT article was groundless. Cohen said KFB has not been contacted by the British banking giant.
Cohen has said several times that Newbridge Capital, the current largest shareholder of Korea First, would not sell off its stake in the Korean bank. He said that unlike other short-term investment funds, Newbridge's usual investments go on for about 10 years. The U.S. investment fund acquired the managerial rights to the Korean bank in early 2000.
by Choi Woo-seok
Source : The Chosun Ilbo - 29/10/03
DAEHAN SEEKS CONSULTANT FOR FUND MANAGEMENT ENDGAME
Korea's big, troubled fund groups must spruce up before the government tries to sell them to foreigners.
Daehan Investment Trust & Securities is said to be about to issue requests for proposals from a variety of consulting firms to help it clean up its organization, given the increasingly likelihood that the Korean government will attempt to sell it or its fund management affiliate.
Daehan ITS and its funds arm, Daehan Investment Trust Management Company (Daehan ITMC), is one of three of Korea's big 'problem' funds organizations. Hyundai ITS has been the subject of sales negotiations with Prudential Assurance, the number-two life insurance company in the United States. Korea ITS (now called Hankook), the third problem company, is expected to follow Daehan's lead.
Cleaning up these hangovers from the Asian financial crisis would be welcomed by the entire funds management industry, both local and foreign.
The origins of the current problem stem to the very foundation of Korea's funds industry, when the first big investment trust companies were founded as 'investment trust companies'. In 1974, Korea Investment Trust Company was the first company allowed to manufacture and distribute unit trusts; Daehan ITC followed in 1977. At the peak in 1999, Korea's top-three ITCs managed W250 trillion ($21 billion) of assets. But they were crudely managed, with no sense of risk control, and in the wake of the Asian financial crisis, were shoehorned into national service (infamously with Hyundai ITC's "Buy Korea Fund"). In August, 1999, the collapse of the Daewoo group exposed huge losses in the three national ITCs' portfolios.
The government stepped in, requiring the ITCs pay investors in full, and bailing the firms out for the difference. The ITC was legally demolished, and forever after the government separated distribution from manufacturing. The ITCs - which at heart were securities companies selling unit trusts - were separated into proper securities companies, the ITS, and the fund management affiliate, the ITMC.
The securities companies promised to take steps to restore profitability, but have failed. These three ITMCs continue to dominate the industry: Daehan and Hyundai ITMCs each manage W17 trillion ($14 billion), while Hankook ITMC has W16 trillion. They remained the top-three biggest unit trust companies in Korea, until Samsung Life spun off its assets into Samsung ITMC last year. These three state-owned fund companies remain awkward problems: their size and poor reputation, as well as the impact they have on fee arrangements (the securities companies get around 94% of fees on unit trusts as a result of their continued exposure to loser portfolios) all hold the funds industry back.
The government has been in talks with Prudential to acquire Hyundai Group (following the collapse of similar talks with AIG), and thus take Hyundai ITMC's troubles off Seoul's hands. Now with negotiations over Hyundai apparently nearing a conclusion, the government recognizes that a solution for the other two must be found.
The broad options are to cut them loose and let them fight for survival (highly unlikely), to merge them into one big ITS and ITMC (without the layoffs that could lead to profitability gains), or sell them. Several foreign fund houses and distressed specialists such as Lone Star are said to have explored buying either of these two state-owned firms, provided they could get the same generous terms that Prudential is fighting for.
But for now, Daehan and Hankook remain in dreadful condition. Last year's crises - the collapse of SK Global and problems with bonds issued by credit card companies - have only worsened their portfolios. Another government bailout to the tune of $4-5 billion is probably required before they can be sold.
As a result of government pressure, Daehan is going to hire a consultant to help it prepare for this process, according to a consultant who has been in discussions with the firm. Daehan is likely to cast a wide net, from accounting firms to investment consultants, from management specialists to human resources firms, and even Korean think tanks.
"Daehan and Hankook aren't in crisis mode," says the consultant. "There have been few internal changes. They want a consultant to put in the effort and give them a clean bill of health so they can move on to the next stage."
Initially, Daehan was looking only to implement a pay-for-performance system, but realized that to do so meant overhauling performance analysis, distribution, sales incentives, business strategy, even the corporate ideology.
Outsiders are sceptical that a consultant's band-aid will do much to improve the situation. "The problem is what's in these companies' portfolios," says a foreign fund management executive.
By Jame DiBiasio
Source : FinanceAsia.com - 29/10/03
SAMSUNG FALLS BEHIND IN BANCASSURANCE
Two of Samsung Group¡¯s financial affiliates have posted poor sales performances in the bancassurance sector that was introduced in September.
Samsung Life and Samsung Fire & Marine only captured market shares of 5.4 and 7.4 percent, failing to appeal to customers seeking to buy insurance policies through commercial banks and brokerage firms.
The two financial services companies ranked first in the domestic life and non-life insurance sectors with market shares of 37.4 and 30.3 percent, respectively, during the first half of the year.
But they ranked seventh and fifth among 13 life and seven non-life bancassurers in the two months since the new business was introduced to the local market.
The Financial Supervisory Service (FSS) on Tuesday attributed the worse-than-expected bancassurance sales to the firms¡¯ charging relatively high premiums and wait-and-see strategies.
``The nation¡¯s big three life insurers are declining to sell the unprofitable savings-type insurance, a main product sold by banks and brokerages,¡¯¡¯ insurance regulator Lee Joon-ho said.
While Samsung Life is aiming to sell lucrative guarantee-type policies in the near future, Lee added customers thronged to banks and brokerages to buy low-premium insurance policies.
A Seoul bank official said, ``Customers have a preference for products of small- and medium-sized insurers or foreign competitors as they promise higher interest rates on savings-type insurance.¡¯¡¯
In the life bancassurance sector, AIG Life topped the list with a market share of 21.7 percent, followed by Shinhan Life with 18 percent, Tongyang Life with 14.4 percent and Kyobo Life with 14 percent.
He also said, ``In the case of the non-life bancassurance sector, it is difficult to predict the future direction of the competition as banks and securities firms are yet to sell auto insurance policies.¡¯¡¯
Hyundai Marine & Fire topped the list with a market share of 31.9 percent, followed by LG Insurance with 30.6 percent, Oriental Fire & Marine with 17.3 percent and Dongbu Insurance with 12.4 percent.
Meanwhile, Kookmin Bank, the nation¡¯s largest lender, was found to be the most successful in attracting policyholders, grabbing 25.4 percent of the market.
Woori Bank took second place with 19.4 percent, followed by Shinhan Bank with 19.2 percent and Hana Bank with 12.1 percent.
Two major foreign banks, Citibank and HSBC, posted poor performances with market shares of around 0.2 percent each.
kys@koreatimes.co.kr
Source : Korea Times - 04/11/03
PRUDENTIAL TO TAKE OVER HYUNDAI INVESTMENT
The sale of Hyundai Investment and Securities (HIS) to Prudential Financial is almost complete, according to regulators and government officials on Monday.
At a meeting of the Public Fund Oversight Committee (PFOC) slated for Tuesday, government officials will approve the proposal involving the sale price and details about future compensation for possible losses of the troubled brokerage affiliate.
After the approval at the PFOC meeting, the government will sign a final contract with the U.S. financial group, a Financial Supervisory Commission (FSC) official said. ``It seems that Prudential will also make its final decision at its executive meeting on Tuesday.''
The FSC is expected to officially announce the details on the terms of sale within this week or early next week, noted FSC officials and the Ministry of Finance and Economy.
Asked about the possible insolvency of Hyundai Securities, the second-largest shareholder in HIS, the FSC official said the government and Prudential will take a wait-and-see approach while Kumgang Korea Chemical is seeking the management rights of the Hyundai Group.
The majority shareholder in the troubled brokerage house is Hynix Semiconductor with a 42 percent stake. Hyundai Securities holds an 18 percent stake.
The government is aiming to write off the capital of Hyundai Investment to zero after making a final contract with the U.S. company.
After the write-off, the Korea Insurance Deposit Corp., a government agency, will invest 2.5 trillion won ($2.1 billion) in public funds into HIS. ``The bailout funds would be used to cover the accumulated deficit of 1.7 trillion won in the brokerage house and to re-capitalize it,'' according to the FSC.
At the PFOC meeting, government officials will likely agree to sell an 80 percent stake in HIS to Prudential for less than $340 million (400 billion won).
According to the memorandum of understanding clinched between the Financial Supervisory Commission (FSC) and the U.S. financial group last March, the sale price for an 80 percent stake in the brokerage house was estimated at $400 million (472 billion won).
The U.S. financial group had allegedly demanded the Korean government compensate all the possible bad assets of HIS in the future while Korean regulators have suggested a price knockdown and more injection of public funds.
kys@koreatimes.co.kr
Source : Korea Times - 17/11/03
CARLYLE CONSORTIUM SELLING STAKE IN KORAM
Temasek said to be looking for partner to buy stake
THE Carlyle Group-led consortium has confirmed it is selling its three-year-old strategic stake in Koram Bank, Korea's seventh largest bank.
After weeks of rumours - including the names of potential buyers, such as Temasek Holdings and DBS Group Holdings - Carlyle's managing director, Asia, David Tung, confirmed yesterday that talks are being held with interested parties.
'We are currently pursuing talks,' he said. 'Koram is one of our portfolio holdings. We are extremely happy with the performance of the bank and its CEO, a former Citibanker whom we recruited.'
On Carlyle's stake, which has diluted to 36.6 per cent from 41 per cent when it bought into Koram Bank at end-2000, he said: 'At the end of the day, we are financial investors - not strategic investors who are prepared to hold an investment in perpetuity.'
Mr Tung would not say who the interested bidders are. Besides the two Singapore entities mentioned, Standard Chartered, which already owns almost 10 per cent of Koram, HSBC and Citibank are keen, reports say. But insiders say the Korean government's preference for a bank to take over Carlyle's stake would likely preclude Temasek unless it teams up with another bank.
Back in 2000, Carlyle had to rope in JP Morgan financial services' dedicated private equity Corsair fund to bid for Koram to satisfy the Korean regulatory authority, which did not want a non-bank to get Koram.
There is also talk now that the Korean authorities may prefer that the new buyer take over the entire bank, not just the stake for which the Carlyle-led consortium paid US$395 million. That could mean spending a few billion US dollars - not just the US$1 billion which Carlyle is believed to be seeking for its 36.6 per cent stake, an insider said. 'The lay of the land is very different now. Seoul's financial health is strong and it can dictate terms,' he said.
A Bloomberg report, quoting another news provider, said yesterday that Kookmin Bank, South Korea's largest lender, rejected an offer by Temasek to make a joint bid for a controlling stake in Koram.
A Temasek spokeswoman declined to comment on speculative reports regarding its intentions on Koram but said Temasek is interested in opportunities in Korea. She said that Temasek now has no direct holdings in any Korean assets.
A DBS spokeswoman noted that chief executive Jackson Tai last Friday did not include Korea when he mentioned countries where the bank would be keen to expand its franchise. He said DBS was looking at opportunities in Indonesia, the Philippines, Malaysia, Thailand and India.
Temasek's reported interest in Korea follows the successful bid for that country's troubled Internet broadband provider Hanaro by a group led by AIG-Newbridge, which is said to include the Government of Singapore Investment Corporation. The US$500 million bid for Hanaro - bitterly contested by another consortium, the LG-Carlyle group - came just in time to save the Internet company from bankruptcy.
By SIOW LI SEN
Source : Business Times Singapore - 04/11/03
CARLYLE, NEWBRIDGE TO BOOST INVESTMENT
Carlyle Group and Newbridge Capital Ltd., U.S.-based private equity funds, are reportedly set to increase their investment in Korea next year, setting their sights on the financial, food, distribution and consumer-product sectors.
Carlyle plans to raise $1 billion to $1.4 billion in funds next year, the bulk of which will be invested in Korea and China, its Korea business chief said in an interview with The Herald Business, the sister newspaper of The Korea Herald.
"In addition to the $750 million which has been raised by Carlyle Asia Partners, we plan to conduct a second round of funding to be worth $1 billion to $1.4 billion," Yoon Jong-ha, the head of Carlyle Korea was quoted as saying by the Korean-language daily newspaper.
"Korea and China will be the major investment destination," he added.
Newbridge will also expand its investment in Korea with a fund estimated to be worth more than $1 billion, the report said.
"Newbridge is interested in consumer-goods producers, which have more stable earnings, as well as financial and information-communications companies," Park Byung-moo, the head of Newbridge Capital Korea, was quoted as saying.
The fund managers are also seeking participation by local investors in their funds in a bid to avoid controversy over the possible flow of wealth out of the country and to share information and know-how on the local market, the report said.
The companies have already contacted several local institutions, the report said citing unnamed sources.
The two U.S. investment funds already have substantial stakes in Korea.
Carlyle is the biggest shareholder in KorAm Bank, Korea's sixth-largest bank. Newbridge Capital acquired a majority stake of the nationalized Korea First Bank in 1999. Late last month, Newbridge and American International Group Inc., a U.S. insurance giant, won a bidding war, allowing them to take over Hanaro Telecom Inc.
By Koh Byung-joon (kokobj74@heraldm.com)
Source : Korea Herald - 08/11/03
CARLYLE ET JPMORGAN SE DÉSENGAGERAIENT DU CORÉEN KORAM
Réunis en consortium, JPMorgan et Carlyle vont vendre leur participation au capital de KorAm Bank. C'est ce qu'indique le "Financial Times" dans son édition électronique de ce lundi, qui précise que la banque d'affaires et la société de capital-investissement américaines pourraient retirer un milliard de dollars de cette opération. Les britanniques Standard Chartered et HSBC, très implantés en Asie, semblent intéressés. Ils pourraient reprendre conjointement 36,6% du capital du sixième établissement de crédit de Corée du Sud. Citigroup, le premier groupe de services financiers mondial, et la société d'investissement Temasek pourraient également montrer leur intérêt.
KorAm Bank a clos l'année 2002 sur un bénéfice net de 221 millions de dollars. Sa situation financière s'est nettement redressée depuis la mi-novembre 2000, date à laquelle Carlyle et JPMorgan étaient entrés à son capital. A cette époque en effet, la banque coréenne était en déficit. Le consortium avait payé 450 millions de dollars pour acquérir 40,5% du capital de KorAm, devenant du même coup son premier actionnaire. Il avait alors racheté leurs parts respectives à Bank of America - désormais numéro deux bancaire aux Etats-Unis - et au groupe d'électronique Samsung.
Source : Les Echos - 03/11/03
ENCHÈRES : EBAY PREND LE CONTRÔLE TOTAL DU LEADER SUD-CORÉEN
L'américain eBay, leader mondial des enchères en ligne, va racheter les 50% du sud-coréen Internet Auction qu'il ne détient pas encore. Le montant de la transaction atteint 382 millions de dollars en cash. Un tel montant peut s'expliquer par l'intérêt stratégique de cette acquisition du plus grand groupe du secteur en Corée du Sud. Avec 23% d'internautes haut-débit, ce pays a en effet le plus fort taux de pénétration du haut débit au monde. Internet Auction table sur des revenus de 73 millions de dollars américains en 2004, soit un bond de 41% par rapport à 2003, et un profit de 17 millions de dollars (+11%).
Source : Les Echos - 17/11/03
EUROPE'S IT EXECUTIVES LOOKING TO COOPERATE
Representatives from European information-technology companies are visiting Seoul to meet with their domestic counterparts, as mutual interest in investment and cooperative projects are rising between Korea and the continent.
According to the Korea Trade-Investment Promotion Agency, European companies have growing interest in seeking cooperative projects with Korean companies, which have invested heavily in IT.
Meanwhile, Korean companies are eager to tap into European markets as an added source of revenue.
"Europe's IT business is worth 650 billion euros ($761 billion) and they hold a 30 percent market share in the sector," said KOTRA in a statement released yesterday.
Some of the European companies attending will include representatives from Wanadoo, France's largest Internet provider; KPN, Netherlands' leading network provider; and Albacomp, one of Hungary's largest computer equipment manufacturers. Korean companies involved in this conference will include KT Corp. and Samsung Electronics.
Representatives will discuss potential joint projects in areas such as asymmetrical digital subscriber line, voice-over-Internet protocol and home networking.
The visit, which began Monday, will end Nov. 3 after a formal meeting between executives from both regions scheduled for Thursday.
By Revekah Kim (rkim@heraldm.com)
Source : Korea Herald - 29/10/03
SOUTH KOREA TIGHTENS RULES ON KT CORP
South Korea, one of the world's most Internet-connected nations, pushed ahead with tighter regulations on KT Corp, the country's biggest broadband Internet operator, to encourage fair competition in a saturated market, according to the Ministry of Information and Communication.
Under the new rules, which are expected to come into effect early next year, KT will require government approval when setting the prices of broadband Internet services.
"The basic approach is to ban KT from exercising its monopolistic position in the market," said a senior ministry official, who asked not to be named.
The rules will also require newcomers to get the government's approval when offering broadband Internet services, putting a barrier in the market.
As of the end of September, KT had tapped more than half of South Korea's broadband Internet market with 5.52 million subscribers, followed by Hanaro Telecom Inc with 2.97 million and Thrunet Co with 1.28 million.
There are 11.3 million broadband Internet subscribers in South Korea, which includes the customers of cable television service operators, according to ministry data.
As the broadband market becomes increasingly saturated, runner-up operators such as Hanaro and Thrunet, both heavily in debt and losing market share, have asked the South Korean government to take action against KT's growing dominance.
So far, the ministry has at different times ordered SK Telecom Co, the nation's top mobile carrier, to hike or slash wireless phone rates, citing its monopolistic market share.
Source : Asia Times/Asia Pulse/Yonhap - 30/10/03
SEOUL TO INVEST W408 BIL. IN IT PARTS
The Ministry of Information and Communication said yesterday it would invest 408 billion won through 2007 to develop core parts that will be used in information technology products, in a bid to replace imports with homegrown components.
Korea is widely regarded as a technology leader in Asia, with its broadband and mobile industries boasting advanced technologies and coveted subscriber pools. But a bulk of core parts for digital products are being imported.
For instance, Korea's major handset makers are churning out high-end camera phones, but they do not have the technology to produce complementary metal-oxide-semiconductors, or CMOS, which is one of the key camera phone components.
CMOS consumes less electricity and utilizes integrated circuits that are designed to digitalize visual images efficiently. For these reasons, CMOS is used for high-end handsets, but Korean manufacturers have been importing the core components.
The Information Ministry said it would introduce a certification system to enhance the quality of core parts, while encouraging the manufacturers of smaller parts to consolidate through mergers and acquisitions.
In 2002, the components industry accounted for 35 percent of the total IT output. But 76.7 percent of the IT industry's annual imports were related to components, leading to an imbalance in trade, ministry officials explained.
The ministry said it aims to develop the fledgling IT components industry into a technology-intensive one. According to the plan, the sector will produce 142 trillion won in output and export $49 billion worth of products in 2007.
Last year, the IT parts industry's output was 67 trillion won and its export volume reached $22.7 billion. When it comes to the size of the industry, Korea ranked third after Japan and the United States.
But ministry officials pointed out that exports relied heavily on TFT-LCD (thin film transistor-liquid crystal display) panels and semiconductors. In 2001 when the PC industry was in a severe slump, Korea's IT components industry suffered a setback and recorded a trade deficit of $500 million.
The Information Ministry said it would designate 22 strategic items including CMOS to concentrate resources and bolster technological competence of domestic Korean parts makers at a time when the global market is shifting toward value added digital appliances.
The ministry added that the Korea IT Fund, valued at 420 billion won, and the M&A Fund, estimated at 120 billion won, will be utilized to spur mergers and acquisitions in the IT component industry.
The Institute of Information Technology Assessment, which is affiliated with the Information Ministry, will establish a distribution network and compile statistical data about the industry in 2004.
The ministry plans to hold a forum with chief technology officers from major IT firms on Nov. 12 to discuss details of the proposed plan.
By Yang Sung-jin
Source : Korea Herald - 03/11/03
KOREA TO BUILD 100M BPS INTERNET SYSTEM
Infrastructure will offer telecom, broadcasting and Internet access from a variety of devices
South Korea plans to build a nationwide Internet access infrastructure capable of speeds between 50M bps (bits per second) and 100M bps by 2010, the online edition of the Chosun Ilbo daily newspaper reported Tuesday.
The infrastructure will be known as the broadband convergence network (BcN) and will offer telecommunications, broadcasting and Internet access from a wide variety of devices, the paper said, quoting the Ministry of Information and Communication.
Construction of the BcN will be worth 95 trillion won (US$80.4 billion) in output of equipment and services, and will create 370,000 jobs by 2010, according to the Chosun Ilbo.
South Korea is already regarded as the world's leading broadband nation, with 11.3 million broadband subscribers in a population of 48 million, and with 85 percent of new subscribers opting for broadband, according to telecommunication equipment vendor Alcatel SA.
Source : InfoWorld - 18/11/03
KOREA TO INVEST W203 BIL. IN TELEMATICS
Korea is to spend 203.6 billion won ($173 million) on the development of advanced mobile telematics systems by 2008, seeking to develop them into one of the nation's top-10 growth engines, a government task force said yesterday.
A telematics task force under the Ministry of Commerce, Industry and Energy released a long-term blueprint for telematics and car "infotainment" systems during a meeting with private-sector executives.
Of the long-term investment, 112.3 billion won will be spent on developing core telematics technologies and expanding the sales of telematics terminals at home and abroad, while another 91.3 billion won will be expended to build relevant industry infrastructure, according to Lee Soo-young, chief of the task force. The government will account for 155 billion won of the aggregate investment, he added.
Source : Korea Herald - 18/11/03
FOREIGNERS UNABLE TO BUY HANARO STOCKS
Foreigners are unable to buy Hanaro Telecom stock as their holding exceeded the 49-percent ceiling, of on Thursday.
The Financial Supervisory Service (FSS) said unless other foreigners sell Hanaro stocks, non-Koreans would be unable to buy in line with the Korean law.
Foreigners are free to buy an unlimited amount of stocks on the Korea Stock Exchange but overseas investment in Hanaro is subject to telecommunication business law. The law bars foreigners from owning more than 49 percent in any telecommunication company, the FSS said.
The AIG-New Bridge consortium is the major shareholder in Hanaro with a 39.6 percent stake.
yoonwonsup@koreatimes.co.kr
Source : Korea Times - 20/11/03
NORTHEAST ASIA'S 1ST BIOCHIP CENTER OPENS IN KOREA
South Korea opened Northeast Asia's first bio foundry for the design and production of biochips on Friday.
The Ministry of Commerce, Industry and Energy (MOCIE) and Hanyang University held the opening ceremony for the bio foundry established in Gyeonggi Technopark in Kyonggi Province. A bio foundry is a research center that designs biochips, makes samples and tests biochips at the request of corporations.The foundry, which consists of a 924-square-meter clean room, biochip production facilities and a lab, was built on a 1,350-square-meter large building. The micro biochip is a semiconductor chip made from organic molecules rather than silicon or germanium. "With the opening of the bio foundry, we have opened the biochip production era. It is forecast to accelerate the commercialization of biochips, which have been dubbed the semiconductor of the 21st century," Kim Jae-hong, a MOCIE director, said.
The government plans to utilize the facility to not only study, design, produce and analyze biochips but also to establish a biochip-related database that would help develop quality management technologies and standardize biochips to be produced in the country. The bio foundry will also foster biochip experts.
Hanyang University instituted Micro Biochip Center in August 2001 together with electronics firms and the government. The university, 17 companies and venture startups, including the Samsung Advanced Institute of Technology, and Gyeonggi Technopark jointly own it.
Source : Korea Times - 31/10/03
KOREA SEEKS TO GRAB 10% OF BIOTECH MARKET BY 2012
The government has finalized its plan to build the country into the world's seventh largest biotechnology player by 2012.
Under the plan, Korean companies seek to capture 10 percent of the global market in the next nine years, up from 1.4 percent last year.
According to the Ministry of Commerce, Industry and Energy (MOCIE) on Thursday, local biotech related production will jump from 1.9 trillion won ($1.58 billion) last year to 17 trillion won ($14.17 billion) in 2012.
Biotech exports will top $10 billion in 2012 from $700 million in 2002. A total of 1.6 trillion won, including 1.3 trillion won in state budget, will be invested.
Under the Bio-Star project, the MOCIE will select promising product groups and support 10 billion won annually for manufacturers that develop and produce biotech products with high growth potential over the next 10 years to promote development of innovative biotech related products. In addition, the MOCIE seeks to make South Korea one of the world's top four medication producers by 2012.
Ten core biomedical technology development projects will be selected and assisted for commercialization.
The 10 cutting-edge biotechnologies will be chosen from six medication sectors, including immunizing agents, drug delivery systems in the body, gene therapy and cell therapy.
The nation is focusing on three strategic areas: new medicine, artificial organs and biochips.
``Countries are racing to get ahead of their rivals in the booming biotechnology market, a field that merges pure science and engineering, which is being rapidly linked to a nation's future competitiveness,'' MOCIE official Kim Eun-ha said.
The general biotechnology competitiveness of South Korea stands at only 60 percent that of developed economies such as the United States, according to the MOCIE.
The government will invest 404.4 billion won into establishing infrastructure and training related workers in three districts that will be developed into regional biotech industrial clusters, each in Kangwon and Kyongsang provinces, the Cholla provinces and Cheju Island and Taejon and the Chungchong provinces, until 2006. Each region will be encouraged to specialize according to their individual characteristics.
By Kim Sung-jin sjkim@koreatimes.co.kr
Source : Korea Times - 13/11/03
KOREA BETTING ON CAR TELEMATICS INDUSTRY
South Korea will bet a total of 203.6 billion won ($173 million) on fostering its automotive telematics system industry into a top-tier player in the world by 2008.
According to the Ministry of Commerce, Industry and Energy (MOCIE) on Monday, a task force under its auspices released a long-term plan for telematics and car ``infotainment'' systems during a meeting with private-sector executives.
Telematics systems are in-car wireless telecom services built into automobiles that combine a global positioning system (GPS), satellite tracking and wireless communications for quick and easy roadside assistance. Besides route guidance, it is also used for vehicle-theft tracking.
A small LCD (liquid crystal display) screen on an electronic device gives the driver real-time updates on the traffic situation in the area by showing the geographical position of the vehicle as a blinking dot. It enables the driver to make smart navigation choices to roads that are less congested.
``The government will create a business environment that will facilitate private firms to operate telematics-related businesses. It will because telematics is a business area that is difficult for a private firm to single-handedly jump into since it involves diverse technological expertise related to car parts, automobiles and telecommunications,'' Deputy Commerce-Industry-Energy Minister Kim Jong-kap said.
Kim said MOCIE hopes the nascent local telematics market will help spur growth in the car industry and give a boost to wireless telecoms and software companies as well. He added that telematics would grow into a key export for South Korea in the future.
Telematics is one of the 10 core next-generation technologies that South Korea is seeking to develop into the nation's future growth engine industries.
Of the long-term investment, 112.3 billion won will be spent in developing core telematics technologies, including driving safety information database development technology, and expand the sales of telematics terminals at home and abroad.
Another 91.3 billion won will be invested in building relevant industry infrastructure and industrial clusters, including building a telematics database center, establishment of a test bed, construction of research and licensing centers and fostering of manpower.
The government will account for 155 billion won of the aggregate investment.
Lee Soo-young, chief of the task force, said MOCIE would revise and ease related laws to furnish a favorable business environment for telematics-related businesses.
South Korea plans to play catch-up with Japan, Europe and the United States. Currently, Japan accounts for 67 percent of the global telematics market, with Europe and the U.S. making up 29 percent and 4 percent, respectively, according to MOCIE. South Korea only accounted for 1.1 percent of global telematics-related production and 0.5 percent of global exports.
However, MOCIE predicts that if the government's blueprint to expand the local telematics industry is carried out as planned, South Korea will capture around 5.6 percent of the $26.5 billion global telematics market by 2007 in combined sales of cars equipped with telematics and in sales of telematics kits and technology to global carmakers.
By 2012, it expects South Korea's market share will reach 27 percent of the $99.4 billion world market.
Considering that South Korea now boasts one of the world's highest penetration rates in both broadband Internet and cell phones and that it has been aggressively investing in wireless Internet infrastructure, there is a high chance that the country will also lead the global telematics market in a not-so-distant future.
Further brightening the future prospect is global computer giant IBM's decision to invest $16 million in a software lab that will develop applications for mobile communications devices, including telematics. The Ministry of Information and Communication (MIC) is investing another $16 million into the project.
The MIC is also planning additional investments for building a traffic information center together with the Ministry of Construction and Transportation in Seoul to store up-to-the minute information on traffic across the country, major roadwork, maps and other aids for use by telematics service providers.
Hyundai Mobis, one of the country's frontrunners in the local telematics industry, a leading auto parts supplier and an affiliate of Hyundai Motor, estimates that, based on the market growth forecast by MOCIE, the company's telematics device-related sales will reach 250 billion won in 2005, grabbing the largest market share, at 30 percent, of the Korean market.
``Our annual telematics-related sales projection includes combined sales of cars made by Hyundai Motor and Kia Motors that are equipped with telematics and telematics kits to other carmakers,'' a Hyundai Mobis spokesman said.
``It is difficult to roll out local telematics market projections at the moment as the market has just started to form in the beginning of last year. But in our view, the local market is forecast to grow to 850 billion won in 2005, about eightfold the current market size,'' he said.
Hyundai Mobis rolled out its first terminal, Exride, for telematics services last September. Exride, a voice-operated telematics system device, goes for 2.4 million won ($2,000) when including the installation fee and the value-added tax.
The Exride terminal, which can be operated by voice command, offers more than 20 features including radio, television, navigation, telematics, a CD player, an MP3 player and voice mail.
The high-tech gadget, which can fit any type of vehicle, can provide services including route-guidance and tracking of stolen vehicles as well as fuel and engine maintenance alerts. Users only need to pay for the wireless Internet access available through their mobile handsets.
Other carmakers have teamed up with wireless-telecom companies to offer telematics services. Renault Samsung Motors and SK Telecom began a service that provides real-time traffic situations and tells the driver which is the quickest route to take last September. The information is transmitted through the driver's mobile phone, which is connected to the telematics terminal.
LG Telecom has joined hands with Hyundai Motor and Kia Motors.
Meanwhile, LG Electronics last Thursday said it will provide handset systems to allow telematics services in two General Motors (GM) car models. They are the Buick Regal and Pontiac Grand Prix models. LG's products will be installed in GM cars as early as 2005.
sjkim@koreatimes.co.kr
Source : Korea Times - 17/11/03
GM WARNS OF HIGHER LABOR COSTS IN KOREA
While Korea's automobile industry is still competitive, sharp increases in labor costs at Korean carmakers could damage their competitive edge and hurt exports, a chief official of General Motors Corp., the world's largest carmaker, said yesterday.
"You have a competitive position in the auto business here in Korea. In the auto industry, exports and labor costs are so important. Because of labor-cost increases, Korea could lose that competitive position," John M. Devine, GM vice chairman and chief financial officer, said in an interview with The Korea Herald. "I don't think that would be good for Korea. It wouldn't be good for GM Daewoo."
He came to Seoul Thursday night after attending the Tokyo Motor Show. Yesterday, he toured GM Daewoo Auto & Technology Co.'s head office and plant in Bupyeong, Gyeonggi Province near the western port city of Incheon.
GM Daewoo was set up a year ago by the U.S. automaker and its partners with assets purchased from bankrupt Daewoo Motor Co.
"Korea's competitive position in auto and many other businesses is quite strong. But we live in a very changing world," Devine said. "When we look at our exports from Korea, specifically GM Daewoo, they have to be competitive on the product side, on the quality side and the price side."
Currently, assembly-line workers of GM Daewoo get $16 an hour, lower than the wage level at GM's European and U.S. operations, he noted. Even in Korea, GM Daewoo's wage is also about 12 percent behind the industry average.
"The real issue is not the comparative cost between GM Daewoo and Hyundai Motor or anyone else but the overall competitive position of Korean exports to markets around the world. On that point, we believe we have a very good position. It has been beneficial for the health of the overall economy and for GM Daewoo. If we lose that, then I think we lose a lot."
Asked to comment on the controversy between the United States and Japan over the value of the yen, Devine said: "Significant intervention by the Japanese government is keeping the yen weak. We believe that (the yen's weakness) gives Japanese automobile companies a windfall profit as they sell products in the U.S. market."
The remark came as Japanese carmakers are gaining bigger shares of the U.S. market. In particular, Toyota Motor Co., Japan's top manufacturer, beat Chrysler in terms of monthly sales in August to seize third place behind GM and Ford Motor Co.
The GM vice chairman added that Korean automakers were also making inroads into the U.S. market. "Hyundai continues to be an important contributor and competitor in the U.S. market. Its market share over the last year hasn't grown as much as some of the Japanese competitors. But it's already a tough competitor in the U.S. market." He also said he was confident that the Korean economy would bounce back soon, expecting an improvement in the local auto industry.
(simonkim@heraldm.com)
Source : Korea Herald - 25/10/03
BMW MAY BUILD LOGISTICS CENTER IN INCHEON
BMW Korea is seriously considering establishing a state-of-the-art logistics complex in the Incheon Free Economic Zone, industry sources said yesterday.
The German luxury vehicle importer plans to secure a 165,000-square-meter site inside the FEZ to house a distribution center for auto parts, a training center for staff, a vehicle distribution center, and a pre-delivery inspection center.
The complex, which if carried out will be completed around 2005-2006, will also be equipped with vehicle test tracks where customers may assess various aspects of performance.
"Expanding logistics center has been on our long-range business plan as it is critical for fortifying our foothold in the Korean market. Unless there are any complications surrounding business conditions, we will proceed with the logistics center project," said Kim Hyo-joon, president of BMW Korea.
"We have not decided on budgetary details, but it is certain that the construction will be financed by either BMW Group or its Korean branch," he added.
The company has requested details of move-in conditions such as rental fees to Incheon International Airport Corporation, which is in the process of receiving applications from companies willing to enter the tax-free zone.
Logistics managers from BMW Group in Germany as well as BWM Korea have recently visited the area to conduct on-site inspections, industry sources said.
BMW Korea intends to maximize the service quality by merging its three small-size logistics centers dispersed in Incheon, which barely manage to process 10,000 units annually.
Under the government's designation two months ago, Korea's first FEZs encompass three regions in the port city of Incheon: Songdo, Cheongla and Yeongjongdo.
The special zone will exempt foreign investors from income and corporate taxes for the first three years of business operations, while entitling them to a 50 percent deduction on the normal tax rate in the following two years. They will also be exempted from import tariffs.
The plan is part of the current administration's goal of developing the nation into the business hub of Northeast Asia.
Source : Korea herald - 03/11/03
VOLVO TRUCK RECALLS TRACTOR
Volvo Truck Korea has announced a voluntary recall of 256 units of tractors due to manufacturing defects, the Ministry of Construction and Transportation (MOCT) said on Monday.
The defects are related to a ball joint at the V-Stay supporting the axle on units assembled between Feb.1 2002 and Jul.31 2002. The defective bolts can be replaced free of charge at Volvo's service centers nationwide for six months from Nov.5.
For more information, call Volvo Truck Korea at 02)3780-8428.
Source : Korea Times - 03/11/03
KAL PLANS TAKE-OFF IN AIRCRAFT PRODUCTION
by Yi In-yul (yiyul@chosun.com)
Cho Yang-ho, the chairman of Korean Air (known as KAL), said Friday that when the airline takes over Korea Aerospace Industries (KAI), an aircraft manufacturing firm, it would be press ahead with a large-scale investment in the production of commercial aircraft.
Cho said that KAL would retain most of the KAI's highly skilled workers, and said he would not go into the details of the manpower restructuring plan for the aerospace firm, as the acquisition contract has yet to be signed.
KAI was born out of a government-led realignment program (called the "Big Deal") in late 1999. At that time, three Korean business groups -- Daewoo, Samsung, and Hyundai -- spun off their aircraft production divisions to consolidate them into KAI.
KAL announced in early September that it has signed a preliminary agreement with Daewoo General Machinery to take over the latter's 33.3 percent stake in KAI.
Cho also said that more than 5 percent of KAL's revenue currently comes from its aircraft manufacturing division, which employs 10 percent of its manpower, and that the firm has been moving forward with negotiations to attract investment funds from several global aircraft makers and components producers, who have been showing positive responses to the investment proposal.
Source : The Chosun Ilbo - 24/10/03
KOREA AEROSPACE OBTIENT UNE COMMANDE DE 45 MILLIONS USD DE VOUGHT AIRCRAFT
Korea Aerospace Industries (KAI) a reçu une commande de 45 M USD de Vought Aircraft portant sur la des structures d'ailes d'avions. KAI fournira 170 bords de fuite pour Boeing B767 et 240 bords d'attaque pour les avions d'affaires Gulfstream-V. Les livraisons s'étaleront jusqu'en 2015.
Korea Aerospace, formé en 1999 par la fusion de Samsung Aerospace, Daewoo Heavy Industries et Hyundai Space and Aircraft Co, est un constructeur d'avions, d'hélicoptères et de satellites.
Source : Dow Jones - 23/10/03
OPPORTUNITY KNOCKS IN KOREA¡¯S INFRA SECTOR
The Hub Korea project has raised potential returns for participants in the national Private Participation in Infrastructure (PPI) program.
According to the government budget plan for 2004 released in September, public infrastructure spending will drop 6 percent, from 18.2 trillion won this year to 17.1 trillion. Central government spending will thus decline, but will not necessarily affect investment opportuniti es for the private sector. On the contrary, to maintain an adequate level of investment in infrastructure, private investment must rise. Additional investment will be necessary in order to build the logistical infrastructure to develop South Korea as the economic hub of Northeast Asia, one of the 12 policy goals of the administration of President Roh, Moo-Hyun.
The concepts of Public Private Partnerships (PPPs) and Private Finance Initiatives (PFIs) have developed significantly worldwide since the 1990s. Korea embraced these new trends in the context of infrastructure in 1994, and initiated Korea¡¯s Private Participation in Infra-structure (PPI) program. Of course, private investment in public infrastructure was sought before this, but it was limited in terms of size and types of facilities. The private sector was authorized to operate and manage public infrastructure only after the new PPI program was installed. This created major new opportunities for the private sector.
From 1994 to 2003, 134 projects have been implemented under this program at a total project cost of $33.25 billion. Most of these projects have been promoted as national policy projects. Of these, the Incheon International Airport Expressway, Cheonan-Nonsan Expressway, Gwangju Second Ring Road and another 32 projects are now in operation.
CREATING A MARKET, BUILDING CONCENSUS
Korea¡¯s PPI Program in Action
Korean PPI has been especially successful since 1998 when the program underwent major revisions. These measures were taken in response to the limited success of the initial PPI program. Insufficient support measures, lack of transparency, complicated procedures, programs not in conformance with global standards, and unsatisfactory risk-sharing mechanisms were often cited as causes. In addition, the 1997/8 financial crisis critically altered the economic and financial environment.
The changes in the program include clearer and more simplified procedures, systematic government support, transparent bidding requirements, and more incentives for the private sector. Submission of unsolicited proposals is encouraged through the provision of bonus points in the evaluation of the initial proposal. A minimum revenue guarantee of up to 80 percent of estimated operational revenue in the case of an unsolicited project, and 90 percent in the case of a solicited project, is also available. A long-term loan or direct financial subsidy may be offered when it is deemed necessary for the implementation of desirable projects. There are other incentives such as a foreign exchange risk guarantee, various tax reductions and exemptions, authorization of supplementary projects, and the establishment of a national PPI unit, the Private Infrastructure Investment Center of Korea (PICKO).
PICKO¡¯s efforts are directed at creating synergies between concerned government institutions and potential investors through both facilitation and technical expertise. Government officials previously labored under a lack of expertise and a common standard to apply in the evaluation and negotiation of PPI projects, which, in turn, created confusion for investors, particularly foreign investors. The establishment of PICKO was designed to meet the needs of both the government and investors for consistent, expert PPI service.
The renewed efforts of the Korean government to promote PPI in the Korean market have been successful. The number of projects is steadily increasing, the types of infrastructure proposed and implemented are diversifying, the geographic range of project sites has expanded, and competition in the market is becoming intense. Initially, the majority of the projects were roads, tunnels, bridges or harbors, and located within the Seoul Metropolitan Area. The range of participants was also limited; sponsors were mostly construction companies, and deals were arranged by the Korea Development Bank. Today, mutual funds, pension funds, and insurance companies are participating in infrastructure projects as equity partners, and numerous investment banks are providing loans. Light rail transit (LRT) projects in urban areas such as Busan, Yongin, and Uijongbu, plus sewage treatment plants (STPs) and waste disposal facilities in other regional cities are on the increase.
As more PPI projects are actively implemented, they are gaining public awareness yet provoking resistance. However, public antipathy toward user fees and labor and environmental issues related to PPI projects is not specific to Korea, as many European countries have also experienced, and continue to experience, the same problems. The government is attempting to ease public sentiment against these initiatives by reducing the price gap between traditionally procured and PPI services, introducing public hearing procedures to reach consensuses, and fine-tuning PPI policy.
A SEARCH FOR CONSISTENCY
Korean PPI Market from a Foreign Investor¡¯s Perspective
Foreign investment in infrastructure is one example of the progress of Korea¡¯s PPI market. Since 1998, nine projects have succeeded in attracting foreign capital amounting to $704.4 million in both equity and debt. The Daejeon Riverside Expressway was the first PPI deal signed with foreign investors, namely Egis Projects SA of France and Singapore Piling. The Busan New Port and the Incheon International Airport 2nd Bridge are recent projects in which foreign investment has been made. Negotiations are underway on the Yongin Light Rail Transit and Geomdan Sewage Treatment Plant, with Bombardier of Canada and Veolia Water (formerly Vivendi Water) of France, respectively. Also, the UFJ Bank of Japan stands ready to raise financing for the Seoul Beltway once the debate on drilling a tunnel through Mt. Sapae in the Mt. Bukhan National Park to facilitate the project is resolved. These three projects are slated to attract a further $175.3 million in foreign capital.
- Part Project Investor
- Equity Busan New Port Phase 1 CSX World terminals
- Busan Gimhae LRT Systra
- Incheon International Airport 2nd Bridge Amec
- Machang Bridge Bouygues
- Daejeon Riverside Expressway Egis, Singapore Piling
- Mr Sujeong Tunnel Macquarie Bank
- Songdo Mansu STP
- Subtotal : 189 million USD
- Debt Daegu-Busan Expressway Mizuho Bank
- Busan New Port Phase I HVB & Others
- Daejeon Riverside Expressway Nomura Securities
- Subtotal : 515.4 million USD
- Total 704.4 million USD
Although the foreign portion within the total amount of private investment in infrastructure is not large, in those projects where it is present, it is a significant component. In particular, for projects with foreign equity participation, the foreign equity stake is 23.3 percent for national, and 93.0 percent for regional projects. Attracting foreign investment for smaller projects has proved relatively easier.
Despite its successful participation in a number of projects, there remain significant obstacles for foreign investment. It was to address these difficulties that a PPI consultative meeting organized by PICKO and sponsored by the Ministry of Planning and Budget was held in June. Specifically, the meeting allowed foreign investors to air their opinions on the problems of Korean PPI and to discuss possible solutions. Rather than radical system reform, foreign investors suggested a faithful implementation of the system already in place. Mr. Serge Sassus, representative director of Veolia Water in Korea, emphasized implementation of a consistent and transparent framework, and asked for the willingness of all parties, including the central government, municipalities, and the private sector, to embrace all of the benefits offered by PPI. Other participants emphasized the negative consequences of the multi-level negotiation structure, the government¡¯s hesitance to share risk, ambiguous language in concession agreements, and the inflexibility of the public procurement process. Other typical problems for foreign investors, including language and cultural barriers, the absence of information in English, and the rigid stance of public officials, were also cited.
Mr. Jun Huh, senior vice president of Hyundai Engineering and Construction, shared his experience with foreign companies and agreed with many of the points their representatives raised. However, he also pointed out the shortcomings of certain foreign investors, such as their demands for foreigner-specific revisions of the Korean PPI system, and their insistence on foreign models and new technology over domestic skills and proven systems even if higher costs would result.
PROPOSALS SOLICITED & UNSOLICITED
Investment Opportunities in Korean PPI
Thirty-six types of infrastructure in the 10 categories of road, rail, port, water resources, communications, energy, environmental facilities, logistics, and culture/tourism are eligible to be implemented under the program. The PPI program, though, does not cover all types of public infrastructure. The program, for example, still excludes projects in such areas as urban development and free trade zones. The government is continuing its efforts to include more types of facility under the program. The private sector can participate in PPI projects either by participating in public bidding or submitting a proposal for a new project. The former are referred to as solicited projects, and the latter, unsolicited projects. The procedures for solicited projects have been modified to encourage competitive bidding for projects that are financially attractive. They also allow for negotiation of the terms of the concession agreement. The concerned authority undertakes the initial development of the project (e.g. the Ministry of Construction and Transportation for transport infrastructure). The concerned authority is also responsible for approval of the detailed engineering and design planning as well as confirmation of project completion.
The process for unsolicited projects is similar to that for solicited projects, but also allows for third-party proposals. In this case, the private sector prepares a proposal, which is then evaluated by PICKO. If approved, a minimum 90-day period is provided for third parties to submit counterproposals. These are also evaluated, and a winning bidder is selected. The initial proposer is given a bonus in the evaluation of the bids up to a maximum of 10 percent of the total evaluation score. The structure of the project is determined through negotiation.
In 2001, the government of the Republic of Korea established its Ten-Year Plan for Private Participation in Infrastructure with the objectives of attracting private sector participation while maximizing the leverage effect of government subsidies. The comprehensive and systematic management implicit in the plan prevents interested parties from duplicating investment by demanding preliminary investment information on candidate projects.
The plan includes a list of 179 candidate projects selected for private investment implementation during the plan period from 2002 to 2011 through consideration of investment priority within each of the five sectors - road, rail, port, environment, and other facilities. As of September 2003, 55 of the 179 are being implemented, while 124 projects await investment.
A review of the plan for possible revision and improvement is scheduled for every three years, with the first slated for 2004. This monitoring is to enable prompt responses to changes the PPI market environment. In order to accomplish the long-term goals of the plan, a greater organizational effort is required to achieve a smooth conversion between government-financed and private investment projects.
COMPETING WITH CHINA
An Invitation to Participate in Building ¡°Hub Korea¡±
The specter of a nuclear-armed North Korea has destabilized the political environment in and around Korea. Aggressive labor unions are also scaring away foreign investors. The worst typhoon in history hit the Korean peninsula in September causing major damage to the country¡¯s infrastructure. Almost every factor influencing foreign investment seems to have turned negative. Korea must face the fact that it must work hard to win the confidence of foreign investors. This is easier said than done but one sure strategy is the showcasing of successful foreign-invested projects, several of which are already in operation.
A selective and layered approach is required to better introduce foreign investment. Given ample domestic liquidity, more emphasis should be placed on attracting strategic investment that secures specialized productive plant, technical skills, or operational expertise rather than financial investment. While finding new and prospective foreign investors, the potential of those already operating within Korea, who may be willing to make a second or third investment, should be recognized.
Korea is actively promoting the PPI program as a major element in its drive to compete with a rising China and become the economic and logistics hub of Northeast Asia. The program is well organized, and many financially viable candidate projects are awaiting investment. A ¡°road show¡± will visit Singapore and Hong Kong in November and feature the two projects that rank as the government¡¯s top priorities: the Busan New Port Phase II and Gwangyang Port. The road show is intended to broadcast to the world that Korea is ready to partner with the international business community in developing the infrastructure that will establish the country as the focus of the world¡¯s most dynamic region.
by Hahm Jung-lim (jlhahm@krihs.re.kr)
Senior Analyst, Private Infrastructure Investment Center of Korea (PICKO)
Korea Research Institute for Human Settlements (KRIHS)
Source KT&I - novembre- décembre 2003
NEW CAPITAL LIKELY TO COST W45.6 TRIL
The planned relocation of the nation's capital has been estimated to cost 45.6 trillion won ($38.5 billion), including 11.2 trillion won from state coffers, according to a government task force yesterday.
The projections of state financing requirements made in the Administrative Capital Relocation Project Team's final blueprint, that was submitted to President Roh Moo-hyun at Cheong Wa Dae, are higher than previous estimates, which ranged from 4 trillion won to 7.3 trillion won.
The team also proposed that the new capital host facilities of the judiciary branch in addition to the administrative and legislative bodies.
According to the plan, the nation's new administrative capital will span 75.9 million square meters and will accommodate a population of 500,000.
The government plans to relocate the nation's administrative nerve center to somewhere in the central Chungcheong provinces. The new capital will be constructed from 2007 to 2030, the team reported.
The report suggested the new city would accommodate 300,000 citizens by 2020, and 500,000 by 2030.
The site for the new capital will be selected late next year. Candidate sites include Osong in North Chungcheong Province and Gongju in South Chungcheong Province.
The task force consists of government officials and private sector experts.
By Seo Ji-eun (spring@heraldm.com)
Source : Korea Herald - 07/11/03
KOREA TO EXPAND INVESTMENT IN DEVELOPING PORTS IN 2004
The government will increase its spending on port development by nearly 50 percent next year to transform the nation's two major harbors into the "mega hub-ports" of Northeast Asia.
Minister of Maritime Affairs and Fishers Chang Seung-woo said yesterday that the government would expand its investment in ports to 2.5 trillion won ($2.1 billion) next year from 1.7 trillion won this year.
"Next year's spending on port development will account for 9.5 percent of the social-overhead-capital budget, up from 8.7 percent this year. The proportion will rise to 13 percent in several years," he said.
"Korea's two largest ports of Busan and Gwangyang will lead the nation's efforts to establish itself as one of the top-five shipping giants in the world," he said, ruling out the idea of giving priority to Busan, the nation's largest, over Gwangyang, the second largest.
Industry experts have questioned the effectiveness of the ministry's plan to develop both of the southern harbors simultaneously.
In a move to lure foreign investors and businesses to Korean ports, the Maritime Ministry and the Korea Trade-Investment Promotion Agency, a state-run agency, will hold joint road shows in Hong Kong and Singapore next week, the ministry said.
"The logistics task force will seek foreign investment in Korea's newly-planned distribution facilities set to be built on 140,000 square kilometers of land around the nation's key harbors by 2005," an official said.
By Kim Sung-mi (smkim@heraldm.com)
Source : Korea Herald - 07/11/03
KAI TO BUILD SUPERSONIC JETS
Korea Aerospace Industries (KAI) will begin mass production of its supersonic fighter jet before the end of this year and place them at air bases sometime in 2005, the company said in a symposium held at the Paradise Hotel in Pusan.
KAI had a successful, historic test flight of the supersonic jet trainer, dubbed the T-50, last February. The aerospace firm, mired in a battle between Korean Air and its labor union due to a planned 28.1 percent stake takeover by Daewoo Heavy Industries and Machinery, plans to export 800-1,200 units of the T-50 and its variant supersonic fighter jet A-50 in the future.
KAI will showcase its aircrafts, including the T-50, A-50, F-50, a propeller pilot trainer plane called the KT-1, as well as, helicopters, satellites, unmanned aircraft and various plane components, during the Korea Air Show 2003, which will kick off on Tuesday at the Busan Exhibition and Convention Center in Pusan.
Source : Korea Times - 03/11/03
KAI TO PRODUCE SUPERSONIC TRAINING JETS
Korea Aerospace Industries, the nation's sole aircraft producer, said it would begin mass production of its supersonic training aircraft this year. The planes will be provided to the Korean Air Force beginning in 2005. The company is also planning to export about 800 to 1,200 units of the aircraft to the United States and other nations. The plan was unveiled during a two-day symposium yesterday in Busan on Korea's aerospace industry. Dubbed the "T-50 Golden Eagle," the supersonic jet trainer was designed and developed by the KAI and was successfully tested in February. The T-50 will be used to train pilots to fly current and next-generation fighters like the F-16, the F/A-22 and the F-35 Joint Strike Fighter, according to KAI.
By Seo Ji-eun (spring@heraldm.com)
Source : Korea Herald - 04/11/03
KOREA AEROSPACE TO EXPORT TRAINER AIRCRAFT TO ISRAEL
Korea Aerospace Industries, Ltd. (KAI) said on Wednesday it concluded a letter of intent for cooperation with ELBIT, an Israeli defense electronics systems company, to export its T-50 supersonic trainer aircraft to Israel. Both companies also agreed to cooperate in exporting the F-5 fighter after its upgrade.
Source : Yonhap - 05/11/03
S.KOREA DEVELOPS PORTABLE ANTI-AIRCRAFT MISSILE
South Korea announced Thursday it has developed its own portable anti-aircraft missile successfully, and such missile can be mass-produced from the beginning of next year.
The missile, named Singung, was developed by the state-run Agency for Defense Development.
"Singung will significantly enhance the military's morale and air-defense system," Lee Un-bong, head of the agency's missile project, was quoted by national news agency Yonhap News Agency as saying.
The missile, with a proven hit probability of more than 90 percent, can strike aircraft flying as far away as 7 kilometers ata speed of mach 0.7-0.8, said Lee Un-bong in a press conference held in South Korean Defense Ministry earlier Thursday.
The South Korean missile is designed to automatically explode against a target flying within a radius of 1.5 kilometers, sendingout as many as 720 fragments in all directions, Lee said.
It was the first time that South Korea has developed a portable anti-aircraft missile.
South Korea already has an undisclosed number of imported portable missiles such as the French-made Mistral and the US-made Stinger.
According to agency officials, the French-made Mistral has about the same level of accuracy as that of Singung. but it is 5 to 6 kilograms heavier than its South Korean counterpart.
The agency has spent 70 billion won (59.3 million US dollars) into its missile development project since 1995, Lee said, adding if the country replaces its French and US-made missiles with Singung, it can save up to 500 billion won (423 million dollars), Lee said.
Under an accord with the United States, South Korea cannot develop its own missiles with a range longer than 180 kilometers. Enditem
Source : Xinhuanet - 30/10/03
S. KOREA TO DEPLOY LONGER-RANGE MISSILES THIS MONTH
Amid tension over North Korea's nuclear weapons program, South Korea will begin deploying next month U.S.-made missiles capable of hitting most of the communist country, a military source said Wednesday.
The deployment comes as part of a US$300 million force improvement program under which South Korea will purchase by next year some 110 surface-to-surface missiles with a range of 300 kilometers, said the Defense Ministry source requesting anonymity.By Kim Hyung-jin
Source : Yonhap - 05/11/03
SK TELECOM TO ANNOUNCE SATELLITE BROADCASTING CONSORTIUM
SK Telecom Co., South Korea's top mobile carrier, will announce Thursday the composition of its consortium to launch a satellite-based digital broadcasting service, the company said Wednesday.
The Seoul-based company will own a 30 percent stake in the consortium, while its Japanese partner Mobile Broadcasting Corp. will hold a 10 percent share
Source : Yonhap - 05/11/03
JO D'ATHÈNES : LE CORÉEN SAMSUNG ELECTRONICS AUGMENTE SON PARTENARIAT
Le groupe coréen membre du " Top V " devient avec Coca-Cola le sponsor du relais de la flamme olympique. Il dépensera plus de 200 millions de dollars, hors contrats, pour les jeux Olympiques d'Athènes. Un accord a été également signé avec Eurosport pour la couverture médiatique de cette manifestation.
Samsung Electronics, qui a été impliqué pour la première fois dans le mouvement olympique en 1998, a signé en fin de semaine passée avec le Comité d'organisation des jeux Olympiques d'Athènes (Athoc) un contrat de partenariat officiel pour le " relais de la torche olympique ", un privilège réservé à deux sponsors (le second étant Coca-Cola). Un accord a été également signé avec Eurosport pour la couverture médiatique de cette manifestation. Déjà membre du " Top V " qui regroupe actuellement onze firmes (McDonald's, Panasonic, Schlumberger, Swatch, Kodak, Visa, Xerox), la firme coréenne va dépenser " 200 millions de dollars hors contrats pour les J0 " , a annoncé Il-Hyung Chang, vice-président, responsable de la communication.
Le ticket d'entrée du " Top V " est estimé à plus de 44 millions d'euros et celui du parrainage de la flamme à un peu moins. Selon les responsables de l'Athoc, les onze sociétés devraient apporter 234,7 millions d'euros sur un total de 509 millions d'euros de recettes marketing programmées. Le budget de l'organisation des JO d'été s'élève, quant à lui, à 1,962 milliard d'euros. Le groupe leader dans les technologies de semi-conducteurs, de télécommunications, d'écrans plats et de convergence numérique (75.000 personnes dans le monde, un chiffre d'affaires de 49,6 milliards de dollars en 2002 et un bénéfice de 5,9 milliards de dollars), va profiter de cette grande manifestation sportive l'été prochain pour montrer son savoir-faire. " Samsung construit un pavillon dans le parc Oaka dans lequel seront exposé les dernières technologies de communication sans fil " , a indiqué le dirigeant coréen. Le groupe fournira également plus de 22.000 téléphones mobiles à l'ensemble de la famille olympique (athlètes, dirigeants, journalistes). Il-Hyung Chang a révélé qu'après les Jeux de Sydney en 2000, " la connaissance de la marque auprès du public est passée de 5 % à 16,2 %, les ventes d'équipements de télécommunication augmentant de 44 % " . Au cours du premier semestre 2003, les ventes d'équipement de télécommunication se sont montées à 5,2 milliards de dollars. " Cette activité a aussi influencé la position de Samsung comme étant la marque ayant la plus rapide croissance au monde pendant deux ans selon le rapport, publié par Interbrand en juillet dernier " , a commenté le dirigeant coréen. En seulement trois ans, la valeur de la marque a plus que doublé, passant de 5,2 milliards de dollars en 2001 à 10,8 milliards de dollars actuellement. " Une partie au moins de cette progression, provient directement des activités dans le marketing sportif " , a ajouté le vice-président de la firme. Il a confirmé la présence du groupe coréen aux JO d'hiver de Turin en 2006 et aux Jeux d'été de Pékin en 2008.
Outre les JO, Samsung développe son action de sponsoring dans le football (partenariat de l'équipe nationale du Portugal, du club anglais Arsenal notamment), dans le golf avec le Championnat mondial Samsung qui fait partie du circuit LPGA (contrat qui court jusqu'en 2006), doté d'un prix de 800000 dollars, et l'équitation avec un partenariat signé jusqu'en 2005 avec la Fédération équestre internationale pour la Super Ligue Samsung dont la France a remporté la première édition cette année.
ALAIN ECHEGUT AVEC CÉLINE CHAUDEAU À ATHÈNES
Source : Les Echos - 03/11/03
SAMSUNG ELECTRONICS SE POSE EN GRAND RIVAL DES JAPONAIS
Le rapprochement stratégique de Sony avec Samsung Electronics dans le domaine des écrans plats est lourd de sens : le géant coréen s'est lancé dans une croisade pour asseoir le prestige de sa marque dans l'électronique grand public. A l'instar du walkman pour Sony, Samsung cherche le "produit qui tue", et s'efforce, en attendant, de prendre de vitesse ses rivaux nippons sur les derniers gadgets du multimédia. A l'inverse des japonais, Samsung a concentré ses ressources sur un petit nombre de segments-clés où ses économies d'échelle lui permettent d'encaisser les aléas du marché. Les trois piliers de Samsung sont les mémoires (numéro un mondial pour les DRAM), le téléphone portable (numéro trois mondial) et les écrans plats (numéro deux mondial pour les écrans à cristaux liquides). Ses produits d'électronique grand public représentent 30 % de ses ventes. Le positionnement de Samsung comme fournisseur incontournable de l'électronique mondiale dans un cycle à nouveau favorable l'a doté d'une capacité d'investissements hors pair. En atteste la rapidité avec laquelle il s'est placé sur le marché des écrans plats de téléviseurs de type TFT-LCD à cristaux liquides, dominé à 70 % par les Japonais. Le développement exponentiel de nouveaux produits multimédias et le renouvellement du parc mondial de téléviseurs font du segment l'un des plus dynamiques de l'électronique. Si le Japon a été le premier à commercialiser des téléviseurs à écran plat, Samsung a pris les devants dans la production de masse de panneaux à cristaux liquides de grande taille - dont la dernière génération fait l'objet de son association avec Sony. Rival de plus en plus agressif des japonais sur les marchés mondiaux, Samsung brille aussi par son absence du marché nippon de l'électronique grand public. "Il y a très peu de produits Samsung au Japon, et il n'y a pas de projet d'augmenter notre présence ici", affirme un porte-parole de Nihon Samsung, qui regroupe les activités du chaebol coréen au Japon.
PRIVILÉGIER LES ALLIANCES
En revanche, Nihon Samsung est une plate-forme clé d'import-export pour le groupe, puisque Samsung Electronics se fournit au Japon pour une grande partie de ses composants, notamment les plus sophistiqués, et vend aux groupes japonais des semi-conducteurs et des mémoires. Soit qu'il existe un accord tacite l'obligeant à faire profil bas au Japon dans les produits de grande consommation, soit qu'il juge plus judicieux de ne pas épuiser ses ressources à pénétrer un marché verrouillé par plus de sept fabricants d'électronique, Samsung préfère profiter de sa bonne santé pour tisser au Japon des alliances stratégiques, à un moment où ses concurrents nippons ont besoin de se recentrer sur les métiers les plus rentables. Outre Sony dans les écrans plats, Samsung s'est aussi allié à Toshiba pour la fabrication de lecteurs de disque optiques et à NEC dans les écrans à électroluminescence organique. Brice Pedroletti
Source : Le Monde - 28/10/03
SAMSUNG PRODUIT LE PLUS GRAND ÉCRAN PLAT LCD AU MONDE
Alors que la demande d'écrans plats pour les industries de l'informatique et de l'électronique grand public explose, les fabricants et les analystes tirent la sonnette d'alarme.
Après les sociétés d'études de marché comme DisplaySearch ou iSupply-Stanford Ressources, qui ont récemment mis en évidence un début de pénurie dans le domaine des écrans LCD-TFT pour les ordinateurs et les téléviseurs, c'est au tour de Samsung d'anticiper une poursuite des difficultés d'approvisionnement de ce type de composants au cours des prochains mois.
Ainsi Yeong-Duk Cho, vice-président de Samsung Electronics, en charge de l'activité écrans LCD, a-t-il indiqué hier que le manque de composants devrait se poursuivre au cours du premier semestre 2004, voire du second, en raison de la forte hausse de la demande.
Prix stabilisés
Deuxième producteur mondial d'écrans plats à cristaux liquides, la société coréenne estime en corollaire que la baisse des prix, largement amorcée au cours des derniers mois, devrait connaître un coup d'arrêt. " En raison de la pénurie, nous ne nous attendons pas que les prix des panneaux baissent par rapport au niveau actuel ", déclare Yeong-Duk Cho, à l'occasion de l'annonce du plus grand écran fabriqué à ce jour. D'une diagonale de 57 pouces (145 cm), cet écran est fabriqué sur l'une des lignes de cinquième génération du fabricant coréen, qui a démarré sa production en septembre.
En dépit de ses difficultés pour répondre à la demande, Samsung estime que le maintien des prix de vente des écrans LCD devrait cependant lui permettre de réaliser un chiffre d'affaires de l'ordre de 7 milliards de dollars dans ce domaine l'an prochain, contre environ 5 milliards attendus pour cette année. Récemment, H. B. Chen, le président du fabricant taïwanais AU Optronics, numéro trois mondial, avait annoncé tabler sur une croissance de 50 % de son chiffre d'affaires l'an prochain, à environ 4,4 milliards de dollars. Le leader mondial de ce marché, LG-Philips, a pour sa part annoncé il y a quelques jours son intention d'investir quelque 2,4 milliards de dollars l'an prochain afin d'accroître sa capacité de production d'écrans grand format pour le marché de la télévision.
Source : Les Echos - 28/11/03
TARTINE ET CHOCOLAT ATTRACTS KOREAN CHILDREN
Tartine et Chocolat, the world's leading luxury children's wear brand, is looking to expand its business in Korea by introducing a wider range of products, the company's top executive said.
"I want to show more new products to my Korean customers. The introduction will include children's food, toys, books, jewelry, cosmetics and bedding - total life style for children," Catherine Painvin, president and chief executive of the French company, said in a recent interview with The Korea Herald. She has been staying in Seoul for the past two months preparing for the business expansion. "Tartine et Chocolat has more than 20 product lines, including sportswear for juniors, a couture line for adults, wallpaper and furniture. Currently, in Korea, only six basic children's wear lines are available," she said.
The luxury children's goods powerhouse, founded in 1977 by Painvin, is famous for its unique blue and pink stripes. The company runs 129 large-sized namesake stores around the globe. Advancing into Korea in 1996, Tartine et Chocolat is sold through 70 branch shops in department stores.
"Korean parents have very good taste in selecting what is good for their children. The children's luxury market is growing and getting more upscale. Not only Tartine et Chocolat but also other top designers are increasingly recognizing the great growth potential in the Korean fashion market," Painvin said.
"But what is missing in Korea is strong enforcement of intellectual property law, which eventually boosts creativity throughout the economy," said the France-born manager and designer.
She mentioned that Tartine et Chocolat in Korea recently underwent significant changes as its relationship with its Korean distribution partner deteriorated due to disputes over product licensing royalties and copyright infringement. She declined to go into the details.
"I apologize to my Korean customers for the confusion and discomfort they may experience for a while. But at least by winter, Tartine et Chocolat business will be normal again and bigger," she said. "I promise that I will take all measures to keep the company's brand image and best serve my customers in Korea."
Meanwhile, a spokesman of Samdo Inc., Tartine et Chocolat's Korean distributor, said he remained hopeful in maintaining a good alliance with his company's French partner.
Painvin received the Legion of Honor Medal last year from the French government, which recognized her 35 years of professional activities as a prolific designer and successful manager.
By Kim Sung-mi (smkim@heraldm.com)
Source : Korea Herald - 10/11/03
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