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  Korea Report - September 2017
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Korea Report - September, 2017.

Korea Inc is under siege from all sides. A combination of internal and external risk factors is surrounding Korean businesses as Asias fourth-largest economy sails through rough waters of a low-growth trap. Among the external factors, the crisis over NKs nuclear and missile threats is the top of the list. The level of crisis is different from those seen in the past. It could strike financial markets and other sectors of the economy at any time. NK crisis has generated another unexpected headwind from China, with major Korean firms like Hyundai Motor and Lotte taking the brunt of retaliatory measures choreographed by the Beijing government in protest of the deployment in SKorea of an anti-missile system, the THAAD. One more headwind is coming from the US over trade issues. The planned renegotiation of the SKorea-US FTA, or in the worst-case scenario its termination as suggested by Washington, could sway Korean exporters. Korean businesses also face an onslaught of government policies that are negative to businesses. Since the May presidential election, businesses here, especially family-controlled chaebol, have braced themselves for a different business environment under the new administration led by Moon administration, which took power riding the wave of anti-establishmentism sparked by corruption scandal involving ousted conservative President Park Geun-hye. Measures taken by new administration with a call to expand protection of the underprivileged also included the increase of the legal minimum wage by the highest margin yet and a push to shorten the workweek. A recent court ruling that ordered Kia Motors to recalculate its base wage for workers and pay at least KW422.3 bil ($376 mil) in unpaid allowances is also cause for concern among other firms. On top of the upward pressure on labor costs came the governments decision to raise taxes for companies and wage earners in the highest income bracket. Never in recent years have businesses faced such massive threats as they do now.

SKorea will launch a pilot program to build the world's largest vessel powered by LNG in a bid to support more green shipping and develop associated industries. The Ministry of Oceans and Fisheries will join forces with local shipyards, builders and state institutes to develop a class of 180K LNG-propelled vessels. The government launched a task force in Jan made up of local companies to develop the emerging marine transport sector to comply with the IMO's sulfur cap on bunkers, set to be enforced in 2020. POSCO, KOGAS, KDB and marine research institutes, will sign an agreement with the oceans and commerce ministry to launch the pilot program.



Korea Inc is under siege from all sides (p.2)

Korean industries will effectively withdraw from China after THAAD dispute (p.2)

SKorea made their ninth consecutive World Cup finals (p.6)

Trump, Kim escalated tension with combative rhetoric (p.7)

NK fired another missile over Japan into the northern Pacific Ocean on 8th (p.8)

NK on 3rd conducted its sixth nuclear test (p.8)

NK is facing further isolation from the diplomatic world (p.9)

Tensions over provocations by NK are not high enough to adjust ratings on SKorea (p.11)

Government budget plan for next year has been set at $381 bil (p.11)

SKorea's trade surplus came to $13.8 bil in Sept (p.12)

Government is to levy taxes on the religious groups from 2018 (p.13)

Corporate M&A by SKorean firms more than tripled in the first half of this year (p.14)

Koreas industries, squeezed by external conditions and domestic policies, to lose their vitality (p.14)

Forbes named SEC one of the five companies that "have shaped Asia and the world" (p.14)

The semiconductor sector veiled the sagging vitality of major industries in Korea (p.15)

Toshiba selected global consortium of SK Hynix to sell its memory business (p.15)

CJ Group made into Fortune's 2017 list of the world's top 50 companies (p.16)

Jinro soju retained its title as worlds top-selling spirit brand by volume (p.17)

KOSPI kept par while KWon weakened (p.18)

SKorea will launch a pilot program to build the world's largest vessel powered by LNG (p.19)

Vale signed COA deals of 20-25 years with five Korean shipping companies (p.21)

MSC ordered 11 ULCS with SHI and DSME (p.23)




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