SEOUL, July 19 (Korea Bizwire) – Seoul’s move to stimulate the national economy cashing in on huge amount of cash reserves held by South Korean major companies has resulted in a backlash from the local business communities.
Choi Kyung-hwan, South Korea’s newly inaugurated Finance Minister, suggested on July 16 a set of measures to reinvigorate the seemingly dormant national economy using varied policies. He said that taxation on corporate cash reserves is under consideration on the ground that such measures might contribute to economic stimulation: helping money stream into households through dividends and more job creation.
“The proposed shoring up dividends and channeling cash reserves into the market is the very measure investors like me have been looking forward to hearing.”
Jim Rogers on South Korean government’s possible taxation on cash reserves held by the nation’s major companies.
The Federation of Korean Industries (FKI), trade group representing South Korea’s large conglomerates, voiced strong opposition to the idea, saying such actions will only hurt investment confidence and ultimately do not benefit the overall economy.
However, foreign investors, immediately welcomed the South Korean government’s possible taxation on cash reserves. Jim Rogers, financial guru and founder of Rogers International Commodity Index (RICI), showed greater support of such measure, saying “the proposed shoring up dividends and channeling cash reserves into the market is the very measure investors like me have been looking forward to hearing.” according to a local report.
According to recent corporate data, South Korea’s top 10 business groups or chaebol, have approximately US$500 billion in cash, that is twofold increase from five years ago.
By M.H. Lee (email@example.com)