- Economists forecast inflation will reach consumers’ pocketbooks by the spring
Date: February 15, 2011
Source: DongA Ilbo
Most Chinese restaurants located in Jongro, central Seoul, have jacked up prices of jajangmyeon, or black noodles, to 5,000 won ($4.47), an increase of about 500 won.
With raw materials prices on the rise, the restaurants have had no choice but to pass their price increases along to consumers. The pressure to raise prices is not confined to restaurants.
Inflationary pressure on consumer prices is expected to worsen as import prices rose at the fastest pace in 23 months in January.
According to the Bank of Korea yesterday, Korea’s import prices rose 14.1 percent last month from a year earlier, the highest since February 2008 when they soared 18 percent on-year.
Import price inflation has accelerated since last August and has risen for 10 consecutive months. Economists forecast import price inflation to reach consumers’ pocketbooks in the coming months.
Import prices tend to put pressure on producer prices a month or two later, and producer prices tend to reflect consumer prices two to three months later.
Consumer prices are expected to be impacted around April or May, according to industry experts. “The surge in international raw material prices is reflected in import prices and it will put pressure on inflation through producer prices and consumer prices,” said Lim Soo-young, a section chief of the BOK’s economic statistics department.
The rise in import prices was mostly attributed to raw material prices. Raw material prices rose 24.2 percent on-year.
Agriculture products have lead the inflationary charge, with a 96.6 percent on-year rise, and wheat shot up 70 percent on-year. In the case of minerals, prices of iron ore jumped 102.5 percent on-year in January.
According to recent data released by the Ministry of Strategy and Finance and the Korea Consumer Agency, prices of 53 out of 80 items deemed necessities rose in January from the previous month. Researchers warn that mounting inflationary pressure will eventually threaten the real economy.
“Growing inflationary pressure is rapidly spreading in emerging countries and will eventually pose a risk factor to [Korea’s] real economy,” stated a report released by the Korea Development Institute.
“Inflation will continue to rise in emerging countries since raw material prices including crude oil are expected to rise this year.” Export prices jumped 4.9 percent in January from a year earlier, hitting a 21-month high since a 7.7 percent on-year gain in April of 2009.
- Companies look to hook up with Korean partners during trade show
Date: February 16, 2011
Source: Yonhap News
A participant offers coffee to Korean buyers during the Asean coffee industry seminar held at COEX. Coffee makers from 10 Asean member countries participated in the two-day event organized by Asean-Korea Centre. [YONHAP]
Korea came a bit late to the premium coffee party, at least compared with other developed countries. Upscale international chains like Starbucks and Coffee Bean have had a presence here for more than a decade, yet it took some time for them to reach the explosive growth levels of the past few years.
Now, you can’t walk a block - or even half a block - without stumbling into a shop selling premium coffee.
With this as the backdrop, representatives of 20 selected coffee and tea exporters from 10 Southeast Asian countries participated in a trade show yesterday in Seoul in an attempt to woo local partners.
The companies at the event hope to capitalize on Korea’s 2.3 trillion won ($2.06 billion) coffee market - which includes coffee shops, drinks and instant mixes - and tea industry by hooking up with domestic firms to export their products or expand their presence here.
The trade show highlighted a unique blend of premium and high-end coffee products. Southeast Asia, after all, is known as the home of the most expensive coffee in the world: kopi luwak, or civet coffee.
The pricey, and decidedly unusual, coffee is made from the beans of berries that have been eaten and excreted by a civet (a small mammal). “Civet coffee makes up more than 50 percent of our sales,” said Vie Reyes, a representative of high-end coffee exporter Bote Central Inc.
from the Philippines. Another firm, Coffindo Trading Company from Indonesia, displayed a wooden gift set containing civet coffee priced at $299 for 260 grams, or $37 for a single shot of espresso.
Company representatives underscored the potential of the local coffee market. “Korean residents living in the Philippines are our biggest foreigner market within the nation,” said Reyes. “Many Korean citizens come to study English and fall in love with our coffee, to the point where we even have a Korean sales agent that sells exclusively to Korean residents.”
Date: February 17, 2011
Source: Hankyung Economy
President Lee Myung-bak, right, shakes hands with presidential envoy Hatta Rajasa, Indonesia’s coordinating minister for economic affairs, yesterday, at the Blue House. Provided by the Blue House
A high-level delegation of Indonesian government officials is visiting Seoul, and Korean firms are expected to aggressively promote businesses in the country. According to the Ministry of Knowledge Economy yesterday, Korean firms have expressed plans to invest a total of $12 billion in the Indonesian market.
Posco, the nation’s leading steelmaker, plans on constructing a $6 billion steel mill while Hankook Tire, the nation’s largest tire maker, is gearing up to build a $1 billion factory in Jakarta.
Lotte Mart, a large discount store chain, also plans on opening more locations in Indonesia, expanding the number from the current 22 stores to 40 and investing $4 billion. The companies’ moves to expand investments in Indonesia come as a group of Indonesian ministers including Hatta Rajasa, coordinating minister for economic affairs, are in town as presidential envoys.
Indonesia aims to become the world’s seventh-largest economy by 2050 by promoting development in its manufacturing, energy and agriculture sectors.
To achieve these goals, it has asked for Korea’s participation in the long-term development project.
The initial proposal was made by Indonesian President Susilo Bambang Yudhoyono to President Lee Myung-bak last December, when Lee visited Bali for a bilateral summit. After meeting with Lee yesterday, Indonesian government officials, including Rajasa and Defense Minister Purnomo Yusgiantoro, met with Korean ministers - including Knowledge Economy Minister Choi Joong-kyung as well as Land, Transport and Maritime Affairs Minister Chung Jong-hwan, and Korea Trade-Investment Promotion Agency President Cho Hwan-eik - to discuss more specific measures for cooperation in sectors including energy, infrastructure, and agriculture.
“Indonesia has abundant resources and potential for growth,” said Knowledge Economy Minister Choi, noting that despite the global economic crisis Indonesia posted an economic growth rate of 4.5 percent in 2009 and 6.1 percent in 2010. “Korea and Indonesia can become cooperative partners in boosting each of our economies.” “Indonesia aims to speed up and expand economic development,” Rajasa said.
“We will try to create an atmosphere favorable to foreign businesses in expanding investments.” Korean officials are scheduled to visit Indonesia in March or April on a follow-up trip.
Date: February 17, 2011
Source: JoongAng Daily
Sales at the nation’s major discount outlets and department stores surged in January, mainly due to a rise in consumer demand ahead of the Lunar New Year holiday, a government report showed yesterday.
Total sales at the three leading discount outlets shot up 21.4 percent on-year last month, compared with a 2.9 percent gain from the previous month, the Ministry of Knowledge Economy said.
Department store sales also jumped 24 percent on-year, marking the fourth straight month of double-digit gains.
The ministry, which is in charge of industry and commerce, said the sharp increase had been expected since the three-day Lunar New Year holiday in early February triggered demand for goods last month.
The traditional holiday usually spurs consumption as people prepare special foods and buy gifts for family members, friends and associates.
The ministry also said that unseasonably cold weather prompted consumers to buy more winter-related goods at stores.
The monthly report said sales at large discount outlets were fueled by a 30.6 percent increase in groceries that accounted for 57.8 percent of all purchases last month. Household and clothing sales were all up by more than 15 percent on-year in the cited month, although figures for electronics dipped 2.0 percent.
Date: February 18, 2011
Source: Hankyung Economy
The free trade pact between Korea and the EU will bring great economic benefits to both sides and break ground for the consolidation of the two markets, an EU diplomat said yesterday.
On Thursday, the European Parliament approved the free trade pact with Korea, bringing it one step closer to coming into force July 1.
Seoul and Brussels signed their bilateral free trade agreement on Oct. 6 following two-and-a-half years of negotiations.
The deal also still needs to be ratified by the National Assembly in order to go into effect as scheduled. “We are at the beginning of a new era in the EU-Korea relationship,” said EU Ambassador to Korea Tomasz Kozlowski.
The trade accord is the most ambitious free trade pact the EU has so far negotiated, and the first of its kind with an Asian country, he said. “This FTA is a win-win deal to both sides and will bring great benefits to both EU and Korean businesses, workers and consumers on both sides,” he said.
“What’s important is that Korean firms will get more access to the European market.” Earlier this week, Korea’s main opposition party agreed to end a two-month parliamentary boycott that has frozen dozens of legislative bills, including free trade deals with the U.S. and the EU. “For the European side, all things have been done for the provisional implementation of the deal as scheduled.
I hope these procedures [approval of the deal by Korea’s parliament] will go smoothly and be completed as soon as possible before July,” Kozlowski said. EU-Korea relations go beyond economy and trade, he said.
“A declaration of strategic partnership adopted between Korea and the EU will lead us to strengthen political partnership and cooperation on a broad range of global economic governance to fight against climate change,” Kozlowski said.
Date: February 19, 2010
Source: Mail Business Newspaper
Korea will “sharply” increase the amount of imported pork and powdered milk subject to its tariff quota system in a bid to ease supply shortages prompted by a massive slaughter of livestock amid the spreading foot-and-mouth disease, a senior finance ministry official said yesterday.
It also plans to add 24 more imported items, including cheese and butter products, to the tariff quota list, bringing the total number of goods to be eligible for relatively lower duty rates to 99, Vice Finance Minister Yim Jong-yong said at a meeting with other economy-related officials.
The lower import duties will be effective until the end of June. A tariff quota is a quantitative threshold on imports, above which a higher tariff is applied. The lower tariff rate applies to imports within the quota, allowing policymakers to adjust duties on specified merchandise to help control inflationary pressure.
Yim said the amount of pork belly subject to the tariff system will increase to a total of 60,000 tons while the amount of powdered milk will go up to 30,000 tons. “The amount could be increased if necessary,” Yim said.
Date: February 20, 2010
Source: Yonhap News
Chung Yong-jin, the vice chairman of Shinsegae Group, said yesterday that the retail giant will use capital returns to invest in future growth. Dismissing charges that Shinsegae Department Store lags in profitability, Chung outlined plans to strengthen the retail group’s place at home and abroad.
At the “Korea CEO Conference” at the Grand Hyatt hotel in central Seoul hosted by JP Morgan yesterday, Chung addressed representatives from 41 investment institutions concerning Shinsegae’s future direction.
Chung spoke for the first time about the expected sale in May of 22.14 million shares of Samsung Life Insurance owned by Shinsegae Group. “Keeping in mind recent trading prices, the remaining [Samsung Life] shares held by Shinsegae are expected to be worth more than 2 trillion won [$1.8 billion],” Chung said. “[The capital] will be actively used to secure investment for future growth and increase profitability.” Experts have long expected that Shinsegae’s stake will go to institutional investors in a series of block sales.
As the owner of E-Mart, Chung said that the nation’s largest discount store chain will expand its “Every Day Low Price” campaign launched last year. “It is necessary to innovate in order to maintain E-Mart’s buying power and ability to differentiate itself,” Chung said.
“[We] will pursue an even stronger low-price policy for fresh produce and processed foods.” Although Shinsegae Department Store has a weaker operating profit rate than its competitors, Chung said the group had invested 1.8 trillion won in the last four years on renovations and new outlets, which had affected profits but will result in stronger returns in the long run.
The group will also focus on building E-Mart as a brand, and will soon finalize plans to enter the Vietnam market and bolster E-Mart’s struggling China unit.
- National Assembly to tackle free trade pacts and issuance of Islamic bonds
Date: February 21, 2011
Source: JoongAng Daily
A number of controversial bills on economic issues, including the approval of several free trade agreements and the issuance of Islamic bonds by Korean companies, are expected to be presented to the National Assembly this month.
The European Parliament approved the free trade pact between the EU and Korea on Thursday, and Korea’s ruling Grand National Party (GNP) intends to push for its approval during the assembly’s extra session.
Unlike the Korea-U.S. FTA bill, the ratification of the Korea-EU FTA is expected to go smoothly. Kim Moo-sung, the majority leader of the GNP, said that the “Korea-EU FTA has less opposition from other parties but it is important to consider plans to help those who may suffer from the FTA.” As for the U.S. FTA, Kim said, “It is not urgent.
We can do it slowly.” Another lawmaker from the ruling party said he is aiming for ratification of EU FTA in April. “We aim to pass the bill in the standing committee this month,” said Nam Kyung-pil, who belongs to the Foreign Affairs, Trade and Unification Committee.
“If we process it in the standing committee, we’ll be able to finally pass it at the National Assembly in April.” However, Nam was more cautious about the prospects of the U.S. FTA. “We’ll deal with it after watching how it goes in the U.S. Congress.”
Another controversial bill is the amendment of tax laws that would allow the issuance of Islamic sukuk bonds by Korean companies. The government has previously tried to modify the laws as it wanted to lure investment from oil-rich nations.
But some lawmakers in the Strategy and Finance Committee oppose the proposal mainly on religious grounds. This issue has caused division within the ruling party and between the ruling and the opposition parties.
The bill passed the subcommittee in December but did not go further. Sukuk bonds are favored by Muslim investors as they conform to Islamic laws, or sharia, which bans interest payments, and the amendment would have provided tax breaks for companies that issued the Islamic bonds.
At the center of the opposition has been GNP Congresswoman Lee Hye-hoon, a Christian. Lee strongly objected to the bill saying the donation of 2.5 percent of returns from the bonds can be used to support terrorism.
Some major Christian organization leaders met GNP Chairman Ahn Sang-soo on Thursday and threatened that they would boycott those who vote for the bill.
However, market analysts say the opposition is misguided. “Countries may have different systems but they are common in the effort to lure Islamic funds,” a brokerage official said. “Associating it with terrorism is outdated.”
As the controversy continues, a Blue House official said in a radio interview yesterday, “The sukuk bill is only to find new ways of raising money.” He added that “there are misunderstandings because Islamic financial rules are different and this has nothing to do with the contract to build nuclear power plant in the United Arab Emirates.” Other bills on the agenda include dividing the National Agricultural Cooperative Federation, or Nonghyup, into separate financial and business units.
The government, farmers and the Nonghyup have reached compromise on most issues, but there is still disagreement about the financing of its insurance unit.
Office of Commercial Affairs, Royal Thai Embassy in Korea
Source : http://www.depthai.go.th