Korean facility investment forecast for 2018
As a result of a capital investment survey conducted by the Korea Development Bank on 3,700 companies, facility investment in 2018 is expected to increase by 4.2% YoY to KRW 198 trillion. In 2018 and 2018, the semiconductor and display industries will continue to drive overall capex, while manufacturing and large companies will continue to focus on capex. Facility investment in 2017 is estimated to have risen 4.9% YoY to 190 trillion won, exceeding W8.2 trillion in the beginning of the year, exceeding 8 trillion won. Meanwhile, domestic facility investment in 2018 is analyzed as having the following four main characteristics. First, investment in semiconductors and displays is on the rise, accounting for 29.2%. This sector is currently experiencing full-fledged investment competition with China, and it is time to find new growth engine industries to prepare for investment and economic slowdown in the industry. Second, the impact of changes in the internal and external industrial structure on facility investment is expanding. Reflecting new industry and technology trends, the auto sector is expanding investment in eco-friendly vehicles and autonomous driving, and the food industry is strengthening investment in the home-based sector thanks to the expansion of one-person households. On the other hand, it appears that the rental business is planning to expand the investment related to the shared service. Third, the proportion of internal financing for facility investment is expected to reach 71.4% by 2018 as companies' internal reserves expand. In particular, large-scale companies accounted for 76.3% of their internal financing, which was 75.2% of the previous year, based on abundant internal liquidity. On the other hand, the proportion of SMEs' internal financing is 32.5%, down from 33.5% in the previous year. Finally, despite the recognition of the need for investment in the 4th Industrial Revolution, companies' investment is not as good as in the second half of 2017. 75.9% of the surveyed companies said that the technology related to the fourth industrial revolution is important, while only 17.9% of the enterprises including investments related to the investment plan in 2018. Accordingly, it is necessary to establish efficient policies of the government that can promote the investment of companies in the 4th industrial revolution
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