South Korea plans to raise the average dividend payout ratio of state-invested companies to 40 percent by 2020, the finance ministry said Friday, as policymakers try to generate more revenue to meet growing outlays.
   
The move comes amid criticism that the government is not being adequately compensated for its extensive stakes in public companies that stood at 61.7 trillion won (US$56 billion) as of this year.
  
For its holdings in 29 large companies, such as the Industrial Bank of Korea, Korea Electric Power Corp. and Korea Water Resources Corp., the government's dividend earnings stood at a mere 325.6 billion won, or a earnings return ratio of 0.53 percent.  
  
Payout ratio is the percentage of earnings paid to shareholders in dividends. 
   
For 2014, the average dividend payout ratio measured at 21.5 percent, down from 24.2 percent the year before. This is much smaller than the 45.5-47.7 percent average tallied for France and the 48.1-68.9 percent reached in Britain in the 2011-2013 fiscal time period.
   
"The goal is to push up the numbers to 25 percent in 2015, and then raise it by 3 percentage points every following year until it reaches 40 percent," a government official said.
   
The country is hard pressed to collect more taxes to meet rising expenditures in the face of sluggish economic conditions.

More payouts by state institutions would push private companies to follow suit, improving income for ordinary shareholders. In general, more mature companies tend to have higher payout ratios.
   
Officials said that while the ratio will be raised, this will not be applied in a uniformed manner and will take into account the amount of debt of individual public companies as well as need for future investment.
   
"It is the government position that most public companies do not need to invest a lot of money at present that will force them to pay smaller dividends, but it is one matter that needs to be checked," the official said.
   
He said the ministry's goal is to forward its plans to the National Assembly in the first half of 2015. (Yonhap)