Seoul: South Korea plans to launch a new sovereign wealth fund next year with the goal of making long-term investments in cutting-edge and strategic industries, the finance ministry said Friday. The initiative is aimed at enhancing the country's economic growth potential by focusing on sectors that promise significant spillover effects.

According to Yonhap News Agency, the new fund will be established with a budget of at least 20 trillion won (US$14 billion). It will be managed by opening a new account under the Korea Investment Corp., leveraging the global investment networks of the state-run company. The fund's primary focus will be on long-term investments without a maturity date, adhering to the principles of profitability, stability, and public interest.

State-run lenders, including the Korea Development Bank, the Export-Import Bank of Korea, and the Industrial Bank of Korea, are set to inject 16 trillion won into the fund. Additionally, approximately 4 trillion won worth of shares, accepted as payments of inheritance and gift taxes, will also be contributed to the fund.

The finance ministry highlighted that the proceeds from these investments will be allocated solely for reinvestment, government dividends, and transfers to the national treasury. The government aims to have the relevant bill passed by the National Assembly within this year, setting the stage for the fund's operational launch in the coming year.