SEOUL, South Korea (AP) — Heeding an international plan to bolster South Korea’s economy, two of the country’s biggest conglomerates promised Monday to delay major projects or halt them altogether.
But the cost-cutting plans by the Hyundai and LG groups weren’t specific on how they will meet a key government demand to shed subsidiaries.
Taming South Korea’s unbridled conglomerates, or chaebol, is a major condition of the International Monetary Fund’s record $57 billion bailout package announced in December.
South Korean conglomerates maintain a flock of subsidiaries under their wings. For example, Hyundai, the nation’s largest conglomerate, has 58 subsidiaries, and LG, the No. 3 conglomerate, has 54.
The conglomerates are widely blamed for the country’s current economic crisis. They have been accused of siphoning off most bank loans, smothering small businesses.
At least eight of the nation’s 30 largest conglomerates collapsed under heavy debts last year, saddling banks with billions of dollars in bad loans and fueling the crisis.
Hyundai said it will halt or delay billions of dollars in new investment projects, focus on key industries and improve the financial information it provides to the public.
It said it will suspend indefinitely a $3 billion steel plant and sell its stake in Munhwa Ilbo, a money-losing national newspaper. The group also said it has stopped building a car factory in Indonesia and will delay by one year a $1.4 billion semiconductor plant in Scotland.
Hyundai also promised to dispose of weak subsidiaries, but did not name them. Hyundai’s businesses include cars, ships, semiconductors, furniture and financial services.
LG’s restructuring program was broader and contained few details. It said it will streamline its business and readjust or scrap by 1999 as many as 90 weak or unprofitable projects.