POSCO buys Daewoo International for $2.8 billion

POSCO on Monday signed a deal to acquire Daewoo International Corp. as the world’s fourth largest steelmaker seeks to diversify its businesses and secure stable sources for raw materials.

The contract was signed by POSCO and Korea Asset Management Corp., representative of Daewoo International stakeholders, and calls for the steelmaker to make the payment by the end of September.

Under the contract, POSCO will acquire about 68 percent of Daewoo International or 68.68 million shares, for 3.37 trillion won ($2.8 billion), 87.8 billion won less than the steelmaker’s initial offer of 3.46 trillion won.

The final amount equates to roughly 49,100 won per share. Daewoo International closed at 32,300 won on Monday, up 0.94 percent from Friday. The highest closing price of Daewoo International shares seen this year is 38,650 won on Jan. 21.

At the end of last year, Daewoo International’s paid in capital stood at 489 billion won. For last year, the company’s revenues came in at 11.1 trillion won while its operating and net profits were recorded respectively at 171 billion won and 125 billion won. 

KT unveils first local tablet PC

KT Corp. unveiled the first tablet PC running on the Android operating system in Korea on Monday.

KT presented the 7-inch Identity Tab made by a mid-sized hardware manufacturer Enspert. It will be officially launched Sept. 10.

The announcement comes shortly ahead of Samsung Electronics’ release of its tablet PC called Galaxy Tab, which is slated to take place at the global electronics display event in Germany this week. KT’s rival SK Telecom plans to release the Samsung product in September. 

Samsung competitor LG Electronics is getting ready to launch its own model in a joint effort with LG Uplus and global giant Apple Inc. is also planning to release its already-popular iPad in the local market sometime this year.

"(The Identity Tab) is a product that combines the strengths of the PC, laptop, e-book device, smartphone and gaming machines,” said Enspert CEO Lee Chang-seok at a news conference. “It specializes in multimedia contents.”

LG, SNU start annual fellowship program for foreign journalists

The LG Sangnam Press Foundation and the Seoul National University began a three-week educational program for foreign journalists on Monday

The foundation and the Institute of Communication Research of the SNU have jointly conducted the program since 1997. A total of 128 journalists from 15 nations took part.

This year’s program is joined by seven journalists from Group of 20 countries including Brazil, China, India, Mexico and Spain. 

Korea wary of China-Taiwan trade

Experts are raising voices for businesses and policymakers to forge closer tieswith China and Taiwan to cope with an emerging economic integration between the two countries.

The two Cold War rivals signed a historic trade pact in late July to cut tariffs and open their markets wider to each other, paving the way for an a pan-Chineseeconomic community. 

The Economic Cooperation Framework Agreement is expected to affect Korean exporters, especially in high-tech industries, which are compete closely with Taiwanese firms in the global market. 

“There will be synergies of combining China’s capital and Taiwan’s technology. Taiwanese goods will become much more competitive especially in China,” said Kwon Hyuk-jae, a China expert at the Samsung Economic Research Institute.

The trade pact will allow Taiwanese companies to attract wider pool of investors and consumers from the mainland.

“It’s difficult to quantify the pact’s implications on Korea but the deal definitely disadvantages Korean firms in the long run,” he added.

The deal calls on China to lift tariffs on 539 Taiwanese products and open 11 service sectors to Taiwanese companies, such as banking, accounting, aircraft maintenance, insurance and hospitals. 

In return, Taiwan is giving up tariffs on 267 Chinese exports worth $2.85 billion.

The change is expected to increase Taiwanese exports by $13.8 billion over the next two years.

For China, it is a major achievement in its efforts to form a pan-Chinese economic bloc with a 1.4 billion population, encompassing China, Taiwan, Hong Kong and Macau whose population.

Korean LCD, petrochemical, and white goods makers are expected to be hit hardest in the face of competition with Taiwanese counterparts.

Of 100 Chinese buyers surveyed, 39 picked Korean electronics would be the most affected, and 22 picked agricultural goods, the Korea Trade Investment Promotion Agency said. 

Korea and Taiwan each make up 10.2 percent and 8.6 percent of China’s imports. A total of 14 products overlap between the two countries in its list 20 major of exports to China. For Korea, the 14 items make up 60 percent of Korea’s total export to China. 

“Exporters should more actively pursue strategic alliances with Taiwanese companies like the way Japanese did to penetrate the Chinese market,” Kwon said.

Experts are calling on the government to speed up negotiations for a bilateral free trade agreement with China and push harder for East Asian trade liberalization. 

“Korea may lose out by Taiwan in the Chinese market. The situation makes casefor Korea to push harder for the Korea-China-Japan FTA,” Park Sang-soo, business professor at the Chungbuk University said.

Leaders from Korea and China in June agreed to start preliminary consultations by September before launching full-fledged negotiations. Private experts from the two countries have been conducting feasibility studies for years. Koreans worry that their agricultural industry would be seriously damaged by competition with cheaper Chinese goods. 

“The government should consider gradual settlement of the pact rather than packaging the FTA at once, by discussing areas with less disputes first,” Kwon added.

The ECFA is also expected to spur interest among other countries in the region in pushing free trade agreements with Taiwan, a former Japanese policymaker forecasted through the Nihon Keizai Shimbun Thursday.

Japan Economic Foundation chairman Noboru Hatakeyama, a former official of Japan’s Ministry of Economy, said Taiwan’s signing of the pact will “help strengthen economic relations and improve bilateral ties between Taiwan and China,” which would lift Taiwan’s status in the region.

Policymakers from the Association of Southeast Asian Nations have recently reaffirmed their push to achieve a single market and production base in 2015. 

A meeting of ASEAN economic ministers on August 24-25 reiterated their commitment to promote trade facilitation measures for free flow of goods in the region. The group is to push FTAs between ASEAN and major Asia-Pacific markets including China, Korea, Australia, New Zealand and India. 

Singapore tightens loan limits

Singapore added measures to rein in speculative property purchases after previous attempts to cool the real estate market had limited effect. 

Singapore will levy a seller’s stamp duty on all residential units and land sold within three years from the date of purchase, compared with one year now, the Ministry of National Development said in an e-mailed statement Sunday. Buyers who hold more than one mortgage can only borrow up to 70 percent of a purchase and must pay 10 percent of the property value in cash, up from 5 percent before, the government said. 

The new steps are among a range of measures to address Singaporeans’ concerns that an influx of foreign workers and immigrants will create more competition for housing, education and jobs. Hong Kong said this month it will tighten mortgage lending rules and increase the supply of land in a campaign to suppress gains in home prices. 

“The property market is currently very buoyant,” the government said today. “The government’s objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals.” 

S. Korea, Peru strike free trade deal

South Korea struck a free trade deal with Peru on Monday, the latest trade pact that could pave the way for Asia's fourth-largest economy to tap deeper into the South American region, Seoul officials said, Yonhap News reported.

Peru marks the second South American country with which South Korea has sealed such a trade pact. 

Kim Jong-il wants to resume six-party talks: report

North Korean leader Kim Jong-il wants to resume the six-nation nuclear talks at an early date through close cooperation with China, Xinhua News reported Monday.

Kim expressed his wish to ease tension on the Korean Peninsula during summit talks with Chinese President Hu Jintao last Friday in the northeastern Chinese city of Changchun, according to the Chinese state news agency.

TV Commercial for G20 Seoul Summit

The Road to Seoul: Shared Growth Beyond Crisis

During the bleak days for the world economy immediately following the global financial crisis of 2008, there was much pessimistic commentary on the possibility of an economic slump that would push the world into another Great Depression.  Although the global economy still faces challenges, the actual outcome has been far better than those worst predictions. 

Much of the credit for averting a repeat of the Great Depression can be given to the unprecedented level of policy cooperation among the advanced and emerging countries of the G20.  The newfound status of the G20 as the premier forum for international economic cooperation owes much to its proven successes to date.  Indeed, the challenges that the world economy faces now, such as growing public sector debt, can be seen as the side-effect of the otherwise effective medicine.

As the G20 prepares to convene its summit in Seoul in November, it will continue its efforts in coordinating policies to meet potential crises and guide the global economy toward recovery. 

But there is a more important task.  The Seoul Summit will see the G20 take a decisive step toward longer-term policy coordination.  This year will see the G20 building the platform for longer-term economic cooperation that will ensure the sustained and balanced growth of the world economy in the months and years ahead.  For this reason, the motto for the Seoul Summit is “Shared Growth Beyond Crisis”.

No one should underestimate the size of the task. Ironically, the better than expected recovery of the world economy presents greater challenges for policy coordination.  While the crisis was raging, the necessity of achieving policy coordination was easily impressed on everyone.  As the immediate crisis abates or morphs into regional crises, policy makers need to be on their guard against complacency. 

Lee has much to do in second half

President Lee Myung-bak enters the second half of his five-year tenure Wednesday with new initiatives for the working-class while the ethical standards of his new Cabinet picks are questioned at the confirmation hearings.

The Lee administration so far has been generally lauded for its international feats and successful responses to the global economic crisis, but chided for the lack of many things -- communication even with the ruling party, flexibility in dealing with North Korea, consistency in employment policy and concrete solutions to health and welfare problems.

It has clearly experienced what it was like to succeed a decade of liberal governments, the republic’s first in its 60 years’ history.

Just a couple months after the administration took office, tens of thousands of people took to the streets for protests triggered by a television documentary on U.S. beef imports.

The demonstrations eventually faded out, but then came the U.S.-bound financialmeltdown.

Backed up by its strong manufacturing sector and lessons learned from another financial crisis a decade ago, the country’s export-driven economy managed to escape the downturn faster than any other nation, drawing enough attention from around the world to host the G20 Summit in November.

Korea is now expected to successfully mediate between advanced and developing countries for balanced growth, to fix the governance of international financial institutions such as the IMF and to reduce trade barriers. 

After intensive involvement by the president himself, a former businessman who became the CEO of a major construction company at the age of 35 in the 1970s, the country won its first overseas nuclear power plant contract in the United Arab Emirates last year.

The president is a globally acclaimed hard worker who wakes up at 4 a.m. and tells his aides to report on state affairs around the clock.

A presidential aide once said Lee’s greatest virtue was that he has no selfish motives, unlike some of his predecessors, whose reputations were marred with corruption especially toward the end of their terms.

A majority of the Korean society, weary of the ideological schisms dating back to the Korean War 60 years ago, welcomed Lee’s center, pragmatist policy directions, principled leadership on law and order as well as plans to reform the public sector and education. 

Lee’s support ratings started to pick up with the economic recovery last year, peaked with the UAE nuclear deal and now remain in the 40 percent range, according to surveys by the Herald Media. 

Samsung Electronics to release Galaxy U in S. Korea

Samsung Electronics Co., the world's No. 2 mobile phone maker by shipments, said Thursday that it will release this month a smaller Galaxy phone through South Korea's third-biggest mobile operator, Yonhap News reported.

   The Galaxy U, the second series of Samsung's flagship smartphone Galaxy, features a 3.7-inch display, smaller than the 4-inch screen of the Galaxy S, it said. The phone is powered by a 1-gigahertz processor and runs on the Google Inc.-developed Android 2.1 system, like the Galaxy S.  

Chinese rush to buy Korean treasury bonds

Chinese investors more than doubled their holdings of Korean bonds so far this year as part of efforts to diversify investment from the U.S. and Europe in the wake of the financial crisis.

Flush with cash, Chinese investors are putting money in the debt, stocks and real estate of Korea, which has been emerging from the global recession most robustly among rich countries.

Chinese invested a net total of 2.48 trillion won ($2.1 billion) in local bonds during the first seven months of the year, according to Financial Supervisory Service and industry data.

With the increase seen so far this year, the amount of local bonds held by Chinese investors rose to about 4.4 trillion won by the end of July, more than double the 1.87 trillion won recorded at the end of last year.

The figure for Chinese investors’ holdings is equivalent to 6.05 percent of all Korean bonds held by overseas concerns and came in at 71.9 trillion won at the end of last month.

In addition to the rapid rate of increase, the composition of Chinese investors’ Korean portfolios has also drawn attention.

According to industry data, the vast majority of Chinese funds were used to buy up treasury bonds. Non-treasury bonds accounted for only 200 million won of the 1.87 trillion won worth of bonds Chinese investors held at the end of last year.

The influx of Chinese funds is expected to continue this year, with some expecting as much as 4 trillion won worth of Korean treasury bonds to be snatched up by Chinese concerns by the end of the year.

Despite the increase, however, Korean won-denominated assets account for only 0.1 percent of China’s $2.45 trillion-foreign reserves, and experts say that the figure is unlikely to increase significantly in the near future.

Along with increasing the amount invested in Korean bonds, Chinese investors have been bolstering their Korean securities portfolio.

According to data compiled under China’s Qualified Domestic Institutional Investor scheme, the proportion of Chinese funds invested in overseas securities markets accounted for by investments in Korean securities jumped to a record high of 4.5 percent during the second quarter of the year. 

Korea’s financial markets could also be experiencing a surge in the flow of China’s state-managed funds.

The China Investment Corp. is thought to be planning to diversify its portfolio, and has been receiving consultations from Korean securities firms.

The CIC manages about $200 billion of China’s sovereign wealth, and its securities portfolio has been heavily focused on North American markets.

About 36 percent of CIC’s investments were directed to securities last year, of which 44 percent are said to have been North American stocks.

The Social Security Fund that manages 776.6 billion yuan ($114 billion) is also planning to raise the proportion of its assets accounted for by overseas assets to 20 percent from the current 7 percent, raising interest in whether Korea will be among those that receive an influx of its capital.

Korean delegates chosen for G20 CEO summit

Fifteen business leaders including chairmen of Samsung Electronics, Hyundai Motor and SK have been chosen to represent Korea at the G20 Seoul Business Summit in November, organizers said. 

They will join more than 100 chief executives from overseas at the Nov. 10-11 forum to discuss post-crisis global growth, green development and corporate social responsibility. It will be held ahead of the summit of the G20 heads of statescheduled for Nov. 11-12.

The CEOs will focus on the role of private businesses in keeping growth momentum going as major governments are withdrawing stimulus measures introduced to tackle the global economic crisis, the organizing committee said.

The Korean delegation consists of 12 non-financial CEOs and three from financial firms.

Disgruntled ex-cop takes tourists hostage

A dismissed policeman armed with an automatic rifle seized a bus in the Philippine capital Monday with 25 passengers aboard, most of them Hong Kong tourists, in a bid to demand his reinstatement, police said, according to AP.

   Six hostages, including three children, were subsequently released.

   Police sharpshooters took positions around the white-blue-red bus, which was parked near a downtown Manila park, and negotiations to free the remaining hostages were under way, deputy director of Manila police Alex Gutierrez said, AP reported.

 It added that two of the Hong Kong tourists, both women, were the first to be released, followed by three young children and a woman accompanying them, Manila police chief Rodolfo Magtibay said. 

Police had earlier reported that the tourists were from South Korea but later corrected themselves.  Others on the bus included three Filipinos - a driver, a guide and a photographer, Magtibay said.

Local film industry cites need for Hollywood money

To resuscitate the ailing local film industry, it must get into bed with Hollywood to co-finance and co-produce films, industry insiders said in a forum Friday.

From its struggles with online piracy, sharp contraction in overseas distribution and sales, and “a failure to get on board the emerging trend of multimedia convergence,” doom and gloom were the words to describe the future of the local film industry during the “Korean Films Going Global” forum at the Korea Chamber of Commerce in Seoul, Friday.

“Unless the Korean film industry begins globalizing through co-financing, co-production, and content sharing with Hollywood, it will continue its course of decline,” said Seo Hyeon-dong, team leader of CJ Entertainment’s overseas investment and production division.

CJ is the current market leader among all major film studios having captured 27.3 percent of the market share this year from its closest rivals Showbox, Mediaplex, and Lotte Entertainment.　

Of the industry’s dire situation, Seo added that in order for the local film industry to bounce back “we must come up with content that is accessible to the world ― not just among Koreans.”

“With the global film industry going digital, restrictions have been brought down and boundaries broken, and the industry has become one market.”

Social networking and online content sharing sites such as Facebook and YouTube were mentioned during the conference as important factors in film marketing and promotion in addition to content development.

Seo added, “with the likes of YouTube, Facebook, and the iPhone ― where people all over can receive and share content ― the ability to seize the opportunity that such outlets can provide has become crucial in the development of ideas as well as for the industry’s survival.”

On the continuing spread of online piracy, illegal distribution, and a reduction in overseas sales of Korean films this year, Seo said “Adding to the industry’s current crisis are paralyzing factors such as online piracy, illegal content distribution, and a contraction in overseas sales of our films.”

SM world tour debut draws 35,000 fans

On a blisteringly hot afternoon, more than 35,000 fans turned out at a sports stadium in Seoul to see a gathering of their favorite Korean pop stars. 

Marking its 15th anniversary, SM Entertainment, one of the biggest entertainment agencies in Korea, hosted the “SM Town Live World Tour in Seoul” concert at the Jamsil Sport Complex on Saturday.

Boasting a lineup of more than 50 pop acts, including BoA, TVXQ, Girls’ Generation, Super Junior, f(x) and SHINee, the blockbuster concert featured genres including classic ballads, folk, hip-hop and dance.

It was a night for SM, the pioneer of the country’s pop star culture and entertainment business, to display their history and influence over the industry.

Despite temperatures peaking at higher than 32 degrees, the crowd, ranging from early teens to elderly fans, were on their feet during the concert, waving placards bearing their favorite stars’ name and singing along to their songs.