| Photo: With a serious economic slump, closed self-employed and small and medium enterprises are sharply growing in Korea. | ||
In the aftermath of the economic slowdown, the number of closed self-employed and small and medium enterprises is growing sharply in Korea. With a decline in real incomes and multiplying debts, households are also applying to credit repair in succession.
Following this sudden increase of households and enterprises in a critical situation, there are more concerns over a series of insolvent operations with more delay of loans in the financial industry.
The Korean Government is promoting a policy to prevent enterprises that are in arrears less than 3 months but more than 1 month, which are not yet a defaulter running into debts from several financial companies, from expanding their insolvent operations to pay off their debts over 8 years maximum.
According to the report from the Bank of Korea, Financial Supervisory Service (FSS), and Small and Medium Business Administration (SMBA) on the 9th, the number of dishonored small and medium enterprises was 646 in the fourth quarter of last year, which rapidly increased by 50 percent from the same period a year ago. Those in January this year multiplied to 184 from 49 in the last January of 2008.
Corporations, which filed for bankruptcy last year, recorded 191 with a 44.7 percent increase compared to the previous year. Most of them were revealed to be small and medium enterprises.
The self-employed sharply fell from 6,060 thousand in September of last year to 5,587 thousand in January of this year. In case of restaurant business, the most sensitive to the economic condition, 17,764 ones were closed following 14,845 ones in December of last year, and 3,093 ones retired from business.
Considering a rise in prices last year, monthly average incomes of nationwide households were 3,370 thousand won, which declined by 0.2 percent from a year ago, but debts per household were 41.28 million won, which increased by 7.4 percent compared to the previous year.
As more households are incapable of returning their debts at the right moment, they are appealing to readjust financial obligations for deferment of debt service and interest reduction.
By Jung Eunsun
정은선 기자 stop1020@ajnews.co.kr
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