The government will establish a 50 trillion won fund for advanced strategic industries, including semiconductors and artificial intelligence (AI). The government plans to cooperate with commercial banks to increase the scale of support for advanced industries to over 100 trillion won, not just stop at fundraising.
On the 5th, the government held a ministerial meeting on industrial competitiveness chaired by Acting President Choi Sang-mok, the Minister of Strategy and Finance, and finalized the plan to establish the advanced strategic industry fund. The industries eligible for support include semiconductors, secondary batteries, displays, biotechnology, vaccines, hydrogen, future transportation, and AI, as defined by a presidential decree. Corporations that can receive government support are those engaged in advanced strategic industries or national strategic technologies under the Advanced Strategic Industry Act. The government will include large corporations as well as mid-sized and small corporations in the scope of funding support.
Through this fund, the government plans to inject up to 50 trillion won in finances over a maximum of five years. Of the 17 trillion won secured under the existing low-interest support program for semiconductors, 13 trillion won remains, and an additional 37 trillion won will come from new government funding. The government plans to secure the 37 trillion won through government guaranteed bonds and the Korea Development Bank's own resources.
The government opted for equity investment as the method of financial support. This includes direct investment in the equity of advanced industry corporations by the Korea Development Bank or the establishment of special purpose corporations (SPCs) jointly with supported corporations. Additionally, support such as subordinated reinforcement and ultra-low-interest loans will also be provided.
The government explained that if capital from commercial banks is drawn into subordinate reinforcement, funding support could reach up to 100 trillion won. The government plans to ensure that the investment from commercial banks will be subject to risk weighting at the level of loans. The funds attracted from commercial banks will be used for large-scale infrastructure investment needed for corporations' electricity and water supply.
The government is establishing this fund to support the competitiveness of our corporations in advanced strategic industries. In particular, the increased external uncertainty following the inauguration of U.S. President Donald Trump is also a main factor in the establishment of the fund. Yu Kwon, the industrial finance division head of the Financial Services Commission, noted, "With the launch of the new U.S. government, high tariffs are being imposed by various countries which is strengthening protectionism, making support for advanced strategic industries, the backbone of exports, increasingly important."
The government plans to submit the amendment to the Korea Development Bank Law and the government guarantee agreement to the National Assembly this month to promote the establishment of the fund.