Green Bubble Warned Like Venture Collapse a Decade Ago

By Yoon Ja-young

Staff Reporter

The green growth drive by the government is evolving in similar manner to that of the venture boom a decade ago, a professor said Sunday, pointing out that concern is growing that a bubble may form and collapse, as was the case with venture firms.

"A decade ago, many venture firms appeared after the Asian financial crisis. Now, green companies are sprouting up amidst the global financial crisis," said Kang Chul-seung, a professor at Chung Ang University.

He said the government seems to be adopting the same policies for its "green" drive as it did to encourage venture firms in the past.

The government has taken the low-carbon, green growth industry as the country's new growth engine and plans to invest between 100 and 200 billion won in the project.

Kang said the "Green Certificate" system, which the government plans to adopt to induce investment in green industries, is similar to the state certificate given to venture firms to induce investment through venture capital.



Under the certificate system, businesses that allocate a certain portion of earnings to developing green technology get state support.

However, the certificate system has problems. As lenders don't yet have adequate information to decide on which businesses to lend to, they are depending on the certificate to tell them which ones are eligible.

However, criteria to distinguish good green businesses are still vague.

Such lending led to a bubble a decade ago for IT ventures. The country's tech-heavy Kosdaq neared 3,000 points around the end of 1999. However, with the collapse of the bubble, the index plummeted to 331.2 in July 2004, hurting many small investors.

Now, green is the theme for the country's stock market. According to a report, one out of four businesses on the bourse now have green-related businesses included in their objectives.

"The concept of green finance isn't clear, and there isn't sufficient corporate information," Kang added, calling for an overhaul of the government's green finance system. "There should be systematic preparation with a mid- to long- term perspective," he said.

chizpizza@koreatimes.co.kr