The government said on the 9th it will push in the first half to enact a special law to create a "strategic export finance fund." The plan is to inject fiscal resources into the fund to support bids for large-scale projects in the defense industry, nuclear power, and plant sectors, where competition between countries is fierce.
The government released the "2026 economic growth strategy" on the day. The fund is expected to be created at a minimum size of 10 trillion won. Projects to be supported by the fund are export projects in defense, nuclear power, and plants, where contract amounts range from at least hundreds of billions of won to the trillion-won level and long-term contracts of around decades are concluded. The policy is for the fund to support mega-projects that individual policy finance institutions such as the Export-Import Bank of Korea and the Korea Trade Insurance Corporation find difficult to support alone.
The main financial source of the strategic export finance fund will be bonds issued with a government guarantee. In addition, it will be financed by government contributions and grants from policy finance institutions, contributions from beneficiary corporations, and government-paid technology fees.
The government will introduce a profit-sharing concept into the fund. Under the current policy finance system, exporting corporations receive fiscal support but bear little risk. The government is said to have the corporations supported by the strategic export finance fund recycle their profits back into the fund. It plans to invest these profits in small and midsize companies and mid-tier companies.
◇ Mexico FTA resumes... push to introduce domestic production incentive tax system
The government will also create a strategic economic cooperation task force to support the special envoy for strategic economic cooperation activities by Presidential Chief of Staff Kang Hoon-sik. It will also push to resume free trade agreement (FTA) talks with Mexico, which recently raised tariff barriers. Starting this year, Mexico decided to raise import tariffs on self-designated "strategic items" by up to 50%.
A domestic production incentive tax system, dubbed the "Korean version of the Inflation Reduction Act" (IRA), will also be introduced. It will provide tax benefits such as corporate tax cuts to corporations that operate national strategic industries such as semiconductors and secondary batteries in Korea.