Daily Management Review

Lotte introduces a new investment plan for $ 44 billion


The South Korean conglomerate Lotte Group, which chairman was released from custody this month, revised the five-year investment plan just two years after its initial announcement.

Now Lotte plans to spend 50 trillion won ($ 44.05 billion) until 2023, Reuters reports.

Earlier, the conglomerate promised to invest $ 35.20 billion by 2021. However, the court proceedings against the chairman of the board of directors Shin Dong-bin, who was imprisoned in February on charges of bribery and abuse of trust, slowed this plan down.

“Since we outlined our previous investment plan, we have been without a chairman for eight months,” an unnamed representative of Lotte told Reuters. “Our revised plan is to inform shareholders and the public that we are re-setting the goal and making a new start ".

“Lotte’s investment plan is typical for a Korean family conglomerate,” says head of research firm CEO Score. “When a family member comes out of a scandal, the firm will announce an investment plan as a kind of goodwill gesture.”

Similarly, Samsung presented a major investment plan a few months after the release of the vice president and de facto head of the company, Lee Jae-yong, who was also convicted of bribery.

In December 2016, the South Korean parliament voted to launch the impeachment procedure of President of the country after the outbreak of a corruption scandal involving her. In March, the Constitutional Court of South Korea supported the parliament’s decision to impeach Park Geun-hye.

The court sentenced Shin Dong-bin to 2.5 years in prison for giving a bribe to Choi Soon-sil, a friend of Park Geun-hye.

Samsung’s vice president, the court said, also bribed Park Geun-hye’s entourage in exchange for various concessions on the part of the authorities for more efficient business management.

The new government of South Korea, which came to power in May last year, called on large companies to invest more in the local economy and create jobs.

According to the new Lotte plan, about 12 trillion won will be spent in 2019, mainly to expand chemical plants in South Korea, Indonesia and the United States. This is the largest annual group investment. The size of investments exceeds 11.2 trillion won spent on the purchase of a petrochemical company in 2016

In its retail business, Lotte plans to improve online services using big data and artificial intelligence, and build more shopping centers. The conglomerate also said it would hire 70,000 people over the next five years.

source: reuters.com