More than half of large companies in South Korea have not yet made a decision on their investment plans for next year amid growing uncertainty, a survey showed Monday.

According to a survey conducted by the Federation of Korean Industries (FKI) on the country’s top 500 companies by sales on their 2024 domestic investment plans, 55 percent of the 131 respondents said that they have not yet come up with investment plans (49.7 percent) or have no plans at all (5.3 percent).

The share of companies that have not yet planned out investments rose by 11.7 percentage points from a year ago.

“The continued uncertainty, led by high interest rates, strong dollar, Russia-Ukraine war, and slow recovery in China, is contributing to the bleak economic outlook for next year,” said Choo Kwang-ho, head of the FKI’s economic and industrial division.

The International Monetary Fund’s downward revision of Korea’s economic growth forecast from 2.4 percent in July to 2.2 percent in October further underscores the challenging environment, particularly for domestic companies.

Among the surveyed companies, only 45 percent said that they have investment plans for 2024. Among them, 61 percent planned to maintain this year’s levels, 28.8 percent intended to expand investment, and 10.2 percent indicated a smaller investment.

The respondents cited an unclear economic outlook, rising costs, and challenges in raising capital due to a tightening financial market as the reasons for lack of investment plans or smaller investments. Approximately one-third of the companies anticipate an uptick in investment in the second half of the next year.

The survey identified key obstacles to investment, including regulations on new and expanded facilities (28.8 percent), lack of support for environmental, social, and governance initiatives (18.1 percent), and lack of support for research and development and facilities investment (13.7 percent).

Respondents called for policy improvements such as lower interest rates (28.8 percent), reduced corporate taxes, and enhanced tax incentives (22.6 percent) to foster a more favorable investment environment.

By Chung Seung-hwan and Han Yubin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]