Last week, the heads of the nation’s five business organizations pledged to make efforts to create jobs, increase exports and expand investment in a bid to help the Korean economy cope with a prolonged global economic downturn.

While the business leaders will be seeking to expand corporate investment, big Korean companies remain reluctant to do so as global economic uncertainty persists. They are following the conventional wisdom that cash is a safe investment in uncertain markets.

According to news reports, Korean corporations are awash with cash. For instance, Samsung Electronics Co., the world’s No. 1 producer of smartphones and memory chips, had 18.8 trillion won ($17 billion) in cash and cashable assets at the end of September, up 28 percent from nine months ago.

In contrast, the company’s investment in production facilities has been on the decline. It decreased from about 7.6 trillion won in the first quarter of the year to 6.2 trillion won in the second quarter and further to 4.5 trillion won in the third quarter.

The third quarter figure was the lowest level since the first quarter of 2010, when it spent 4.1 trillion won on facility expansion.

The situation is not much different at other major corporations. Hyundai Motor, LG Electronics and POSCO increased their cash holdings by 20 percent, 13 percent and 11 percent, respectively, during the first nine months of the year. But they all scaled down facility investments.

These companies are not to blame for their preference for cash. One lesson they learned from the 1997-98 financial meltdown was that a company should hold a buffer of high-quality liquid assets when the risk of a liquidity crisis looms.

Yet it is obviously not desirable for these companies to sit on large cash holdings while reducing investment in facilities. Delaying investment increases opportunity cost, or the value of foregone production, and ultimately impairs their long-term competitiveness. It also reduces the number of decent jobs available.

To induce corporate investment, the government needs to provide new investment outlets for corporations. It should step up efforts to foster new industrial sectors that can serve as a magnet for new investment.

It is also necessary to improve the domestic investment environment to boost corporate investment, facilitate the U-turn of domestic companies operating in foreign countries and attract fresh foreign direct investment.

The most important task is to foster small and medium-sized enterprises. To revitalize the Korean economy and create more jobs, it is essential to beef up the capabilities of SMEs to invest in facilities and R&D.