President Lee Jae-myung said on the 10th that he would expand the National Growth Fund, a presidential campaign pledge, from the existing 100 trillion won to 150 trillion won, saying it "will breathe life into our stagnant industries and lay the cornerstone for Korea's future." The funding would comprise 75 trillion won from the Advanced Strategic Industry Fund run by the Korea Development Bank and 75 trillion won from private sector, pension funds, and financial companies' contributions and the public's investments, and would be injected into AI (artificial intelligence) industries and projects over five years. During the discussion calling for the role of financial companies, there was also self-reflection from the industry that "it is true we made money by getting used to loans."
That day at Front One in Mapo, Seoul, Lee hosted the "National Growth Fund national briefing and forum," inviting participants from industry, startups and ventures, and the financial sector, and heard opinions from the field. At the event, Lee said, "We decided to be more bold and increase the 100 trillion won fund we mentioned before by 50% to 150 trillion won," adding, "We will also overhaul the support methods and invest on a large and long-term scale in core industrial projects that will lead our economy."
Lee said, "We will create an environment where capital does not flock to easy interest revenue or real estate investment but can also focus on venture investment and innovation investment," adding, "We will change policy directions so that resources such as funding for the venture ecosystem and ultra-long-term, large-scale infrastructure support can be utilized."
He particularly noted that major countries such as the United States and China are competing by investing massive fiscal resources in advanced strategic industries, while also emphasizing revitalization of the venture ecosystem. Lee said, "It is true that we have somewhat fallen short in fostering venture innovation companies as we have focused national resources on the growth of large corporations and on catching up with advanced countries," adding, "Korea will have a future only if we make successful companies do even better and revitalize the venture ecosystem so that those who fail can make a comeback."
He signaled an intention to actively inject fiscal resources to nurture venture companies in advanced industries and draw in private capital. He also said he would create an environment to improve the "interest business," the main business model of formal-sector finance. Lee said, "To foster advanced industries that will lead our economy's new takeoff and to revitalize the venture company ecosystem, the financial sector needs a sweeping shift to productive finance, away from pawnshop-style operations that lend money on collateral and collect interest as it does now," adding, "We will create an environment where capital does not flock to easy interest revenue or real estate investment but can also focus on venture investment and innovation investment."
◇ Park Hyeon-joo, Jin Ok-dong say "we reflect on relying on loans"… call for easing separation of banking and commerce
That day, the financial sector also acknowledged business practices that have generated revenue through loans. Park Hyeon-joo, chairman and founder of Mirae Asset Group, said, "Korea's venture investment totaled 11 trillion won last year and about 2.5 trillion won in the first half of this year. Korea's deposits exceed 2.3 quadrillion won, but the country has largely grown on real estate loan-centered finance," adding, "Financial institutions got used to loans and made money. This needs to be fixed. I have reflected a lot as well." He added, "I will hold a meeting with executives related to investment. We are doing something wrong right now."
Shinhan Financial Group Chairman Jin Ok-dong said, "We solemnly accept the public criticism that we have engaged in easy, collateral-centered business," adding, "That is because we lack foresight." He continued, "To build foresight, we must pioneer accurate credit evaluation methods and also develop capabilities in industry analysis," adding, "I will promise before the president to devote myself to this field." In response, Lee smiled and said, "Thank you." He also replied, "We will change policy directions so that resources can be used for funding the venture ecosystem and ultra-long-term, large-scale infrastructure support."
From the industry came repeated calls to ease the separation of banking and commerce for CVCs (corporation-type venture capital). They argued that to nurture bio startups, the separation of banking and commerce that blocks co-investment by CVCs should be improved. Jin said, "If they can play the role of GP (general partner), the banking sector can join, and the investment pie will get bigger," adding, "Korea is probably the only place where CVCs are bound by the separation of banking and commerce." He also said, "If you exempt CVCs from the separation of banking and commerce, when Celltrion invests 50 million won, banks will put in 500 million won."
Celltrion Chairman Seo Jeong-jin also said, "The highest probability of success comes when large corporations nurture their juniors. Then large corporations will never invest in something destined to fail. They will go to the most certain place," adding, "If financial institutions join and a government fund comes along, the probability of success is the highest." He continued, "But because of the separation of banking and commerce, large corporations cannot do this freely," adding, "It would be good if you change the long-standing task of the separation of banking and commerce."
He also stressed the role of private financial companies, key actors in the National Growth Fund. Korea Federation of Banks Chairman Cho Yong-byeong said, "Korea's capital is concentrated in real estate and deposits," adding, "Deposits have low interest rates, and real estate is long-term even if you invest, so it takes time to recover. If the public is to grow together, we must invest in corporations with core competencies." He added, "If the government shores up the bottom and banks and corporations support the middle, the public can come in first in priority, and the structure can grow greatly as a win-win where they also enjoy profits."