Seoul: The finance ministry will push for the creation of a sovereign wealth fund and a special fund for strategic export support next year as part of efforts to boost the economy, Minister Koo Yun-cheol said Thursday. "To raise the potential growth rate (of the Korean economy) and overcome polarization, we will come up with an economic growth strategy for 2026 by the end of January," Koo said during a work report to President Lee Jae Myung, noting the strategy will be centered around six key areas.
According to Yonhap News Agency, Koo stated that his ministry will push for the establishment of a sovereign wealth fund in the first half, taking cues from similar funds in Singapore and Australia. The ministry is also planning measures to effectively manage state-owned properties, currently valued at approximately 1,300 trillion won (US$882.3 billion), to expand public housing and support the growth of strategic industries such as artificial intelligence (AI) and renewable energy.
South Korea's planned investment in the United States, under a bilateral tariff deal reached in late October, will see the government establishing a strategic investment corporation and a special fund for selecting "commercially rational" investment projects. To safeguard national interests, a special law on managing strategic investment in the U.S. will be legislated, ensuring the monitoring of impacts on the Korean economy and the foreign exchange market.
Under the finalized trade agreement, Seoul will contribute $200 billion in cash installments, with an annual cap of $20 billion, for investment projects in the U.S. Additionally, $150 billion will be allocated for bilateral shipbuilding cooperation. A separate fund aimed at strategically supporting exports and overseas business deals of local companies is also on the agenda, along with the establishment of a new committee focused on economic security to address supply chain disruptions.
The growth strategy will further incorporate a plan for fostering an AI transition, aspiring to position South Korea as a global leader in physical AI, including AI-powered robots, automobiles, and ships. Koo emphasized the goal of achieving at least 1.8 percent economic growth through proactive fiscal policies and measures designed to enhance consumption, investment, and exports, while implementing a system to regularly monitor the foreign exchange and real estate markets.
In response to the business community's appeal for easing the separation of banking and industry, Koo mentioned that the ministry will contemplate special exemptions of regulations for holding companies and methods to rationalize economy-related laws. Specifically, the ministry intends to alleviate regulations on shares of a holding company in its subsidiaries within advanced industries that demand significant investment, such as the semiconductor sector.
In terms of fiscal and tax policy, Koo reported plans for bold expenditure restructuring to optimize asset allocation and a tax system designed to channel capital flows into productive sectors.