One in Four Mid-Sized Companies Plans Investment in the Second Half of the Year

Junggyeonryeon '2024 Second Half Mid-sized Company Investment Outlook Survey' Results
'Urgent Support Needed for Investment Activation Such as Expansion of R&D and Facility Investment Tax Support, Corporate Tax Reduction'

Despite ongoing global economic uncertainties, one out of four mid-sized companies reported having investment plans for the second half of this year. Among them, 88.4% are expected to either expand or maintain their investment scale compared to the first half.

According to the "2024 Second Half Mid-sized Company Investment Outlook Survey" released by the Korea Federation of Mid-sized Enterprises on the 18th, 25.0% of mid-sized companies plan to invest in the second half of the year. Notably, 17.8% of those with investment plans intend to invest more than 100 billion KRW.

The types of investment were surveyed as 'domestic facility investment (85.4%)', 'domestic R&D investment (25.2%)', and 'overseas investment (14.6%)' (multiple responses allowed). The main purposes of investment were securing growth engines such as 'new or expanded factory construction (32.0%)', 'R&D investment (13.6%)', 'eco-friendly and ESG investment (3.9%)', and 'digital transformation investment (3.9%)'. Additionally, 'maintenance and repair of existing facilities' accounted for a significant 38.8%.

Regarding funding methods for investment, responses were 'utilization of internal funds (52.8%)', 'borrowing from financial institutions (35.8%)', 'use of policy finance (5.7%)', 'issuance of stocks and corporate bonds (3.8%)', and 'others (1.9%)' in that order.

Among mid-sized companies with investment plans for the second half, 45.7% said they would expand their investment scale compared to the first half, while 42.7% planned to maintain the same level. Only 11.6% responded that they would reduce their investment scale. The primary reason cited by companies planning to expand investment was 'expansion of core business (36.2%)'. This was followed by 'improvement and replacement of aging facilities (23.4%)', 'entry into new businesses (19.1%)', and 'overseas market expansion (12.8%)'.

On the other hand, mid-sized companies that planned to reduce investment compared to the first half pointed to factors such as 'domestic market sluggishness (33.3%)', 'economic downturn (25.0%)', 'export sluggishness (8.4%)', and 'high interest rates and financing difficulties (8.3%)'. Additionally, 25.0% reported having completed their investments in the first half.

Mid-sized company executives agreed that to activate investment, support policies such as 'tax reforms (34.0%)' including corporate tax cuts and expanded tax incentives for R&D and facility investments, 'interest rate reductions (27.4%)', and 'price stabilization and domestic demand revitalization (18.9%)' are necessary. This survey was conducted from the 10th to the 28th of last month, targeting 412 mid-sized companies.

Lee Hojun, the full-time vice chairman of the Korea Federation of Mid-sized Enterprises, stated, "Recent declines in productivity, lack of future growth industries, and slowdown in facility investment are key factors deteriorating the growth potential of our economy alongside population decline," adding, "To ensure the success of the government's dynamic economy policy, we will closely communicate with the government and the National Assembly to create an environment that can actively drive investment by mid-sized companies, which are central to the growth ladder."