Seoul: The industry ministry announced on Monday its proposal for a record 13.88 trillion won (US$9.97 billion) budget for the upcoming year. This budget aims to revitalize the sluggish economy and enhance trade response measures amid global uncertainties.

According to Yonhap News Agency, the proposal represents a 21.4 percent increase from the 2025 budget of 11.4 trillion won, as reported by the Ministry of Trade, Industry and Energy. If the National Assembly approves the proposal, it will be the first time the ministry's budget surpasses 13 trillion won.

The ministry plans to significantly increase its budget for the artificial intelligence (AI) transformation of the manufacturing industry to 1.1 trillion won in 2026. This initiative aims to help the sector address challenges arising from a shrinking workforce and a slowing growth rate. Of the 1.1 trillion won, 220 billion won is allocated to a project focused on building at least 500 AI factories by 2030. Additionally, 402.2 billion won is dedicated to developing physical AI, such as humanoid robots, on-device AI chips, and AI software for the automotive, home appliances, and other industries.

Furthermore, the ministry intends to increase its 2026 budget for advanced industries to 1.6 trillion won, up from this year's 1.3 trillion won. The focus will be on developing core technologies, including a mini-semiconductor fabrication plant, advanced chip packaging technology, icebreaker technology for Arctic shipping routes, and advanced technologies for the battery and display sectors.

The ministry has also allocated 1.27 trillion won for the transition to renewable energy, marking a 42 percent increase from 2025. The budget will be utilized to promote the use of renewable energy, develop next-generation small modular reactors, and support the government's plan to construct high-voltage direct current (HVDC) infrastructure nationwide by the 2040s.

In response to global trade uncertainties, the ministry has earmarked 1.7 trillion won, which, if approved, would represent a significant 67.8 percent increase from its 2025 budget. Of the 1.7 trillion won, 600.5 billion won will be contributed to the trade insurance fund to support the overseas expansion of Korean industries, including shipbuilding. Additionally, 42.4 billion won will be used as emergency export vouchers for small and medium-sized enterprises.