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  Korea Report - November 2018
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   Korea Report - November 2018 [secured].pdf (480.2K), Down : 6, 2018-12-05 22:24:05

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KOREA REPORT - NOVEMBER, 2018.
 

South and North Korean militaries began destroying 20 front-line guard posts on 11th after withdrawing troops and firearms as they implemented a comprehensive agreement on reducing tensions on the tense border. Seoul and Pyongyang signed the military agreement on Sept 19, including measures to prevent armed confrontation along the Military Demarcation Line and on the Northern Limit Line, a de facto sea border in the Yellow Sea. As part of the agreement, Seoul and Pyongyang completed withdrawing troops and firearms from 22 guard posts in the DMZ. Seoul and Pyongyang agreed to preserve two demilitarized guard posts, one on the southern side of the DMZ and the other on the northern side. Seoul and Pyongyang will start work to verify the outcome of destroying the guard posts in Dec. SKorea currently has some 60 guard posts in the DMZ, while the North has about 160 such posts there. Many people criticized the action, as voluntary disarmament in front of NK readily to invade.

Uncertainty over the denuclearization of NK is increasing as the deadlock continues in talks with the US. A red light appeared when the US and NK canceled a meeting in New York between US Secretary of State Mike Pompeo and his NKorean counterpart. Moreover, President Trump has reaffirmed that his administration would not rush to negotiate with the North and would maintain the harshest-ever sanctions against the Pyongyang government. Vice President Mike Pence emphasized the US would continue to exert unprecedented diplomatic and economic pressure on NK. As if to reciprocate the hard-line US position, NKs state media made it clear that it wouldnt budge an inch. A pro-NKorean newspaper in Japan said on 10th that talks between NK and the US would not be necessary if Washington did not intend to implement the June summit agreement between Trump and NKorean leader Kim Jong-un.

The slowing Korean economy has been shadowed by the possibility of a steep asset devaluation, which could push it deep into a long-term recession. With investment declining and employment worsening, a simultaneous fall in stock and real estate prices could see the country go through something similar to Japans two lost decades spanning the 1990s and 2000s, economists here warn. In provincial cities, house prices fell more than 3% in the first 10 months of this year. The decrease was close to 10% in industrial cities along the southeastern coast, where shipbuilders laid off massive numbers of workers to cope with worsening managerial conditions. The number of home transactions around the country decreased 12.7% on-year earlier to 643,168 in the first nine months of the year. The downward trend in house prices should be watched closely as signaling a considerable loss of household assets. Real estate accounts for nearly 75% of net assets held by all households in the country.

Government policymakers and lawmakers from the Democratic Party of Korea agreed to work together to introduce what is called the cooperative profit-sharing system. President Moon called on the National Assembly to pass the proposed law before its ongoing regular session ends in Dec. He said the envisioned scheme would serve as a way for small and medium-sized enterprises and large companies to grow together. Critics indicate the idea of sharing profits earned by large corporations with smaller firms goes against market economy principles and would cause unintended conflicts and confusion in the course of turning it into reality. Large companies agreeing to participate in the program would be required to pay a preset share of profits with their subcontractors and suppliers if they achieve a target for profits. In return, they would be rewarded with various incentives including corporate tax breaks.

Korean government and private companies are planning to order 140 ships powered by LNG to support small and medium-sized domestic yards. The vessels will be ordered by 2025, including two next year. The deals will create a market worth around KW1 tril ($890 mil) for the yards. The government and the private sector will also invest KW2.8 tril by 2025 to build infrastructure for the ships. In addition, the state announced new financing of KW700 bil and a one-year roll-over of KW1 tril of existing debt guarantees. In April, the government announced a plan to order 200 new vessels by 2020 as it seeks to boost domestic yards and owners following years of depression. Deals for 140 bulkers and 60 boxships were on the cards.

TOPICS.

President Moon digested hectic schedule in Singapore and Papua New Guinea during 13-18th [p.2]
SKorea was granted waiver to temporarily continue importing Iranian oil [p.2]
Koreas major labor umbrella union, KCTU, staged a walkout on 21st [p.4]
Employment elasticity is estimated to fall to a nine-year low of 0.11 this year [p.4]
The US reaffirmed that inter-K relations and denuclearization of NK should progress in tandem [p.7]
Uncertainty over the denuclearization of NK is increasing as the deadlock continues in talks [p.8]
EU companies called on Korean government to bring regulations to international standards [p.10]
SKorea's consumer sentiment slid to a 21-month low in Nov [p.11]
OECD set SKoreas growth rate at 2.7% for this year, 2.8% for 2019 [p.11]
Government to introduce the cooperative profit-sharing system [p.13]
SEC ranked No 2 in this year's reputation ranking among global IT firms [p.14]
Coupang has secured a $2 bil investment from SoftBanks Vision Fund [p.17]
Sales of HMC's premium Genesis marque have surpassed cumulative 200,000 units [p.17]
Koreas equity market experienced volatility since US-China trade conflict heightened [p.17]
Bank of Korea raised its key interest rate by 25 basis points to 1.75% [p.17]
Korean govt and private companies plans to order 140 LNG powered ships [p.19]
HHI Group has won 22 LNGC orders this year, among 45 LNGC orders contracted worldwide [p.21]
Samkang S&C keeps raking in major turnkey retrofit contracts [p.23]
Korean operators are said to have been competing in Vale's project [p.23]


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