BUSINESSWEEK ONLINE : SEPTEMBER 25, 2000 ISSUE
INTERNATIONAL -- COVER STORY

An Economy at War with Itself


South Korea boasts as vibrant an info-tech sector as any other emerging market. But the country is still weighed down with debt and other debris from the collapsing Old Economy.

NEW KOREA

-- Some 60% of Korea's 45 million people use mobile phones. Some 50% will be online by yearend.

-- Roughly 7,700 new companies started this year, up 50% over last year. The government is providing tax breaks and other incentives.

-- Some $24 billion in foreign direct investment has rolled in over the past two years, mostly into info tech. Some $16 billion more is expected this year.

OLD KOREA

-- Seoul banks carry at least $100 billion in nonperforming loans. Corporate debt is $630 billion--a staggering 150% of GDP.

-- Chaebol such as Daewoo and Hyundai haven't restructured quickly enough and carry big debt loads.

-- Business-to-business online exchanges that could lower procurement costs have been slow to take off.



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