Lotte Group Chairman Shin Dong-bin. (Photo: Lotte)

Lotte Group Chairman Shin Dong-bin, returning to work to end a long-time management vacuum, has come up with a mega plan to invest 50 trillion won in Korean and overseas business operations and create approximately 70,000 jobs in the next five years.

The group plans to continue to invest an annual average of 10 trillion won into the chemical and distribution businesses, the group’s two business axes, to ramp up business competitiveness and secure new growth engines. Lotte has decided to create more new jobs, contributing to reinvigorating the national economy.

The group’s investment plans, which had been put on hold by the management vacuum, caused by his absence, are expected to be activated quickly. Chairman Shin presided over an executives’ meeting on Oct. 23 in which the group finalized its investment and job creation plan.

 “(We) have to proactively cope with the future of uncertainties and unpredictable changes.” he was quoted as saying. The more difficult the business environment, the more aggressive the investments, he added.

Lotte has decided to allocate 35 trillion won, or 70 percent of the 50 trillion won it will plunk down, to domestic investments in the next five years.

It plans to front-load 12 trillion won next year, the first year of the massive investment plan, in order to help the group play a part in normalizing the sagging national economy. The figure surpasses 11.2 trillion won the group poured in 2016 to acquire a petrochemical business following a big deal with Samsung Group.

It means that the group’s investment will rise more than 20 percent over an annual investment of about 8 trillion won, a group official said. Lotte Group, which ranks fifth in terms of sales among conglomerates, will be the fourth largest investor in Korea.

A focus in the group’s investments in the next five years will go to the chemical and construction businesses. The group will allocate 20 trillion won, or 40 percent of the total investments, into the sectors.

Lotte plans to nurture the chemical business, which has established itself as one of its cash cows, into a growth engine with massive investments.

Lotte plans to pour 4 trillion won to transform a naphtha cracking facility in Indonesia into a supersize one. Even though a land site was secured, the project had failed to gain ground due to the management vacuum, caused by Chairman Shin’s absence. But things are expected to change afterward.

The group’s project related to ethane-cracking facilities in Louisiana, the United States, is also the case.

The group has a strategy of making facility investments in Yeosu, Ulsan and Daesan plants to achieve the economy of scale and enhance unit price competitiveness.

Two years ago, Chairman Shin had to give up a scheme to acquire Axiall, a U.S. chemical company, to rise to a global chemical player, a ranking group official said. The group plans to explore more aggressive M&As down the road, he added.

A Focus on e-Commerce

In the distribution sector, Lotte Group plans to concentrate its capabilities to e-Commerce.

The group plans to channel 12.5 trillion won or 25 percent of the total future investments into expanding the on-line business and to accelerate projects such as the development of multi-purpose shopping malls with greater employment spill-over effects.

Digital technologies such as AI and big data will be utilized in a more aggressive fashion, so customers will be given a chance to enjoy new experiences, the official said.

In particular, massive investments will be made to build distribution infrastructure covering on- and off-line networks, he said.