SEOUL, July 14 (Reuters) - South Korea is studying ways to help funnel more of the growing cash reserves held by domestic companies into the broader economy, a finance ministry official said on Monday, without elaborating.
Kim Chul-ju, head of the finance ministry’s economic policy bureau, said by telephone the government has been “looking at the issue” but has not reached any conclusion on any detail, such as whether, what and when to introduce new rules.
Public broadcaster KBS TV reported on Monday the government was considering imposing punitive taxes on companies holding excessive cash while providing tax or financial advantages to those sharing more of their profit with employees.
KBS TV did not disclose any source but added the finance ministry plans to announce the result of the study later this month at the earliest, when the ministry is due to release revised economic policy goals for this year.
Companies hold some of their earnings for emergency use but there has been criticism especially among politicians that South Korean companies were holding too much cash internally instead of sharing profit with shareholders or employees.
A private corporate news website called The CEOScoreDaily estimated cash reserves kept by the country’s top 10 business conglomerates at 476.7 trillion won ($468.36 billion) as of the end of June last year.
It said the figures were for the 82 non-financial affiliates of the conglomerates listed on the local stock market.
It estimated the Samsung Group’s 13 affiliates, including smartphone maker Samsung Electronics Co Ltd, held 162.1 trillion won of retained reserves, followed by Hyundai Motor Co group with 109.6 trillion won.
This was compared to the country’s annual government budget spending plans totalling 309.7 trillion won for this year or annual private-sector capital investment totalling 111.6 trillion won as of 2013, official figures show.
The central bank trimmed its forecast for 2014 economic growth last week to 3.8 percent this year from 4.0 percent, though that it still substantially higher than last year’s actual 3.0 percent growth. Domestic demand and exports have both been weak. ($1 = 1017.8000 Korean Won) (Reporting by Choonsik Yoo)