(EDITORIAL from the Korea Times on July 24)

Strong Performances
Firms Should Invest More to Speed Up Recovery

It sounds like an earnings surprise for the nation's major businesses that are
coming up with better profit figures despite the reverberating global economic
crisis.

According to the financial information provider Fn Guide, the top 10
largest companies in terms of market capitalization are expected to enjoy 16.4
trillion won ($13.1 billion) in combined net profits this year, up 65 percent
from last year's 9.9 trillion won.
It goes without saying that the predicted profit rebound is the direct result of
massive fiscal stimulus and eased monetary policy at home and abroad. That is the
key reason that businesses have fared relatively well to ride out the worst
crisis since the Great Depression. They have managed to bear the fruits from
their efforts to step up marketing activities and research and development (R&D).
It is not easy to play down the corporate performances.
Among the companies are the world's biggest memory-chip maker Samsung
Electronics, LG Electronics, steel giant POSCO, the No. 1 shipbuilder Hyundai
Heavy Industries and the nation's top carmaker Hyundai Motor. Samsung Electronics
is predicted to post 6.2 trillion won in net profit in 2009, up 13 percent from
last year. LG Electronics is also forecast to record 1.6 trillion won, up from
482.8 billion won.
Boosted by these upbeat predictions, the benchmark KOSPI stock index is
approaching 1,500 points, reclaiming pre-crisis territory. Other financial and
economic data are regaining stability with the local currency gaining ground
against the U.S. dollar. It is not strange that optimism is growing over a
recovery in growth.
The Bank of Korea revised up its growth projection early this month by saying
that the economy will shrink 1.6 percent this year, compared with its earlier
prediction of a 2-percent contraction. In late June, the Ministry of Strategy and
Finance readjusted its earlier forecast of negative 2 percent to a 1.5-percent
shrinkage. The ministry also expected that the economy would rebound to around 4
percent next year with an $8 billion current account surplus.
But we have to bear in mind that the nation cannot paint too rosy a picture about
the economic prospects because of persisting uncertainties and downside risks.
Most businesses are still reluctant to increase their investment. The nation's 30
largest business groups' planned investment in the latter half of this year fell
6.1 percent from a year earlier. Consumption has yet to show a sign of picking up
despite expansionary fiscal and monetary policies.
Considering those risk factors, it is still early to predict a full-swing
recovery as early as next year. Thus, it is necessary for the nation to double
its efforts for a robust economic rebound by stimulating facility investment,
fueling consumption, creating more jobs and finding new growth engines. Many top
companies are sitting on their hands, just accumulating huge sums of cash
reserves. Now they are required to make more investment to help the nation take
the recovery road as soon as possible
(END)