SEOUL, Sept. 20 (Korea Bizwire) — A growing number of South Korean companies failed to generate enough operating profit to pay tax and interest payments on their debt, data showed Sunday.
The number of listed companies that logged pre-tax operating loss last year amounted to 541 companies, or 31.1 percent of the total, according to corporate tracker Chaebul.com.
The number of companies that were exempt from corporate tax due to operating loss rose to the highest level in five years, adding 30 firms from 2010, the website said.
Three out of 10 listed companies failed to make sufficient profit to pay down the principal on their debt, it noted.
The rising number of “zombie companies,” which refer to firms that do not generate enough operating profit to pay tax and interest payments or require constant bailouts, has been considered a factor that plagues the South Korean economy.
Economic policymakers have announced a series of measures to tackle the zombie menace problem amid growing economic uncertainties, including slowing growth in the Chinese economy and a looming U.S. interest hike.