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Top 30 conglomerates to expand investment over 5 percent this year

All Headlines 10:10 March 09, 2016

SEOUL, March 9 (Yonhap) -- South Korea's leading business groups are expected to expand their investments slightly in 2016, but spending on research will likely stay almost unchanged from a year earlier amid worries over worsening business conditions, a survey showed Wednesday.

According to the survey by the Federation of Korean Industries (FKI) of the top 30 conglomerates, they plan to invest 122.7 trillion won (US$101.3 billion), up 5.2 percent from a year earlier.

The survey showed that their investment in facilities will grow 7.1 percent on-year to 90.9 trillion won, but spending on research and development is expected to remain almost unchanged at 31.8 trillion won.

The figures are based on the annual breakdown of each conglomerate's annual and mid-term investment plans.

The Samsung Group, the country's largest family-owned conglomerate, plans to spend 15.6 trillion won in building semiconductor facilities until 2018. Auto giant Hyundai Motor Group will invest 13.3 trillion won in green and smart car projects until the same year.

The FKI added that the leading companies actually invested a total of 116.6 trillion won in 2015 out of the 125.9 trillion won they had aimed to spend annually, as the slowing global economy weakened their investment sentiment.

Meanwhile, the survey showed that 80 percent of those companies expect to see the prospects of their overall business conditions get worse this year, while a mere 6.7 percent expect a slight improvement. More than half said that the economy will not start to recover until 2018.

Slumping exports were cited as the most serious challenge, with 30 percent of the companies saying so. Falling profitability, volatile financial markets and weak consumption came next.

The FKI urged the government to ramp up their support for leading businesses to carry out their investments as planned this year.

"At a time when business conditions at home and abroad are worsening... the leading 30 conglomerates are expected to invest pre-emptively," an official of the FKI said. "To make their investment plan more effective, we need government support such as easing regulations and nurturing new growth engines."

kokobj@yna.co.kr
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