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Questions Still Abound Regarding Samsung's Investment Plans

17:54 August 10, 2018 replay time02:18

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[Anchor]

The latest 180 trillion won investment plan from Samsung is being lauded as a generous investment.

But industry observers argue that it is critical to find out if the plan is feasible, saying that the investment plan could backfire if it is just for show.

Han Sang-yong has more.

[Reporter]

South Korea's large conglomerates announced huge investment and hiring plans following meetings with Finance Minister Kim Dong-yeon.

Following LG's plan to invest 19 trillion won this year, others including Hyundai Motor, SK and Shinsegae released their own hiring and investment plans in a move to buttress the slowing economy.

Samsung vowed to invest 180 trillion won and hire 40,000 more people over the next three years amid rumors that the government is asking large conglomerates to spend more money.

Samsung said 130 trillion won will be allocated to South Korea, which translates to around 43 trillion won annually.

But given Samsung's 60.2 trillion won investment made at home and abroad last year and a total of 142.9 trillion won in investments made over the last three years, the latest investment plan is less impressive.

The plan to hire 40,000 workers is smaller than it seems considering it includes Samsung's previous plan to hire 8,000 employees as regular workers from its service arm.

The most important issue at hand is if Samsung will execute the plan. The reason why there are doubts about the plan is that it was announced as Vice Chairman Lee Jae-yong is in the middle of trials over his alleged involvement in a massive corruption scandal.

<Park Sang-in / Professor at Seoul National University> "Investment and hiring plans should not be motivated by political reasons or the group owner's own interests because, in that way, it will only add to economic burdens in the end. In the country's history, none of such promises made by conglomerates have ever been fulfilled."

Industry watchers also stressed that investment plans should be made at a sector level, not a group level.

<Kim Jin-bang / Economics Professor at Inha University> "Any plan based on political and social motivation is less reliable and useful, so investment plans should be made according to each company's situation."

In the country's past, large conglomerates have announced massive investment plans upon the launch of new administrations, most of which fizzled out in the end.

Thus, experts suggested that the country needs an environment where a company can establish its investment plan without political motivation and outside interference and be able to faithfully implement its plans as promised.

Han Sang-yong reporting for Yonhap News TV.

Yonhap News TV: (Inquiry on article/Report) KakaoTalk/LINE jebo23

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