South Korea’s Post-Crisis Investment Remains Weak

by Karen Lydelle Linaja / Sep 20, 2016 08:28 AM EDT

The post crisis corporate investment in South Korea continues to remain weak.

South Korean companies rise in investment still remain weak since the global financial crisis happened in 2008. However, even there is a recovery in large businesses' new commitments as it urges another tax incentive for the corporate investment in the country.

According to a report from the Korea Economic Research Institute (KERI), the corporate investment increased by 1.2 percent based on its yearly average. Compared to the 5.7 percent average for almost an eight year period of time including the 2008 global financial crisis, there is a slight growth in the period of 2009-2015.

KERI is a private economic institute in South Korea founded in the year 1981. It is run by the Federation of Korean Industries, which is known as the biggest business lobby that represents top 600 firms in South Korea. One of the organization's goals is to provide growth and development in the economy and to maintain a corporate growth.

KERI also gives the South Korean companies long and short term tasks in order to develop a Free Market system with a healthy economy that will lead to the future growth and development of a country's economy.

On the other hand, the slow growth in the investment followed by the global financial crisis resulted to a sharp decline in the investment from small and medium-sized companies. The investments made by small and medium-sized companies increased by 10.5 percent in the period of 2001-2008. While the amount declined by 1 percent in the seven-year period followed by the 2008 global crisis.

Large companies and firms pulled out some new investment but it continued to grow by 2.5 percent in 2009 compared to the 4.2 percent rise in the 2001-2008 period.

"In addition, investment by large companies have posted a positive gain since 2014, while that of smaller firms continue to remain on the wane. There need to be policy measures to help reduce the investment cost of local firms, such as a cut in corporate tax, in order to promote corporate investment that is showing signs of rapid contraction," the KERI report said.