Among material parts and equipment companies, the number of ‘zombie companies’, which had lower profits than interest expenses for three years, nearly doubled in four years. The government has been emphasizing the importance of the material parts and equipment industry and has invested a large amount of government budget. have. However, it is pointed out that ‘are not mass-producing zombie companies that depend on the government budget rather than strengthening competitiveness’ due to the application process for small managers, performance of support projects, and poor verification of support targets.
Zombie companies that depend on government budgets increase significantly
According to data submitted by the Ministry of Commerce, Industry and Energy on the 7th by Kwon Myung-ho of People’s Strength, the number of zombie companies among small managers in the country increased from 437 in 2017 to 654 in 2019 and 890 in 2020. As of July of this year, a total of 620 zombie companies were counted. More likely to increase by the end of the year
A zombie company is a company with an interest coverage ratio of less than 1 for three consecutive years. The interest coverage ratio refers to the ratio of operating profit to interest expenditure. If this ratio is less than 1, it means that you cannot pay off even interest with the money you earn.
In particular, the number of zombie companies increased significantly in chemical products manufacturing, electronic parts and communication equipment manufacturing, and mechanical equipment manufacturing. In 2020 compared to 2017, the number of zombie companies in the chemical manufacturing sector (21 places -> 65 places), electronic parts and communication equipment manufacturing (56 places -> 120 places), and mechanical equipment manufacturing (88 places -> 236 places), etc. increased by 2-3 times.
It is pointed out that although a huge budget has been prepared after Japan’s white list exclusion measures in 2019, the performance of these government projects is still questionable. Although there were achievements in terms of ‘independence of the general manager’ such as a decrease in the size of imports from Japan in the general manager industry, the government’s project to support the general manager industry did not have much effect on the overall growth, rather it was a ‘zombie company that depended on the government budget. It means that only ‘ mass-produced.
In March 2019, when Japan banned the export of materials and parts equipment, the government immediately set up an additional supplementary budget worth 273.2 billion won, greatly increasing support for the small housekeeping industry. In 2020, even the ‘Special Act on Superintendent Directors’ was proposed, and a special account for sub-directors was created, increasing the amount of support to 1.28 trillion won.
However, while emphasizing ‘speed warfare’ while chanting “independence from Japan” politically, it is pointed out that the verification of budget support and performance management were poor. In particular, experts explain that the large increase in the number of zombie companies from 2019, when government support increased enormously, is that uncompetitive companies have survived thanks to the government budget.
“Requires thorough performance management”
In January of this year, the Minister of Commerce, Industry and Energy at the time participated in the ceremony to declare the best company in the field.
First, there are voices pointing out the performance and performance management of budget support. The government used 116.5 billion won as a supplementary budget for 2019 and 602.7 billion won for 2020 alone as a budget for materials and parts technology R&D among the budgets related to the manager. For this project, the government exempted it from a preliminary feasibility study to verify the project performance in advance.
However, there are also voices of criticism in terms of performance evaluation after the fact. According to the Budget Policy Office of the National Assembly, only 10 of the 41 projects to support the development of small manager technology started through the supplementary budget in 2019 generated at least one case of sales of 50 million won or more in 2020.
“The materials and parts technology development project shortened the project execution period for each project and expanded the scale of support for each project at the time of the 2019 supplementary budget, but as of July 2021, there are only a few projects that generate results. is difficult,” he pointed out.
Cases of insolvency were also revealed in the application process for small managers. The ‘Special Act on Supervisors’, passed by the government and the National Assembly, includes the content that the government or public institutions will purchase technology developed products from sub-minister companies first to increase their self-reliance. The purpose was to increase the competitiveness of the companies by preferentially purchasing the products developed by the small managers directly by the government.
However, it appears that no specific plans and procedures have been prepared for preferential purchase by the general manager until one year and six months have passed since April 2020, when the law was passed. The Ministry of Trade, Industry and Energy said, “In the case of the priority purchase procedure for the technology development products for the manager under the Special Act on the manager, there has not been a Presidential Decree yet.” “We are requesting it through individual administrative measures.”
The government is in a position to continue providing support for the small processing industry by nearly 2 trillion won every year until 2024. However, it is pointed out that the support system, procedures, and performance verification should be strengthened more than now.
Rep. Kwon said, “The government and the Blue House shouted out only political slogans such as ‘independence and strengthening of the chief executive’, but showed poor response in relation to the actual growth of the small chief industry. I need this,” he said.
Reporter Sung Sang-hoon uphoon@hankyung.com
