Financial Services Commission Chairman Lee Eog-weon speaks at the signing ceremony and seminar for the National Growth Fund at the Korea Development Bank's IR Center in Yeongdeungpo District, western Seoul, on May 18. [NEWS1]
The government's National Growth Fund has supplied 8.4 trillion won ($5.6 billion) to advanced industries in its first four months of full operation, Financial Services Commission (FSC) Chairman Lee Eog-weon said Monday.
"The National Growth Fund is a meaningful policy that has shifted the paradigm of finance from conservative management to productive investment," the FSC chair said at a performance review and outlook seminar held at the Korea Development Bank's IR Center in Yeouido, western Seoul.
The National Growth Fund is a government-backed financial product that targets advanced strategic industries, including AI, semiconductors, batteries and biotech.
It has approved 11 investments and support items since its full-scale launch earlier this year. More than half of the disbursements have gone to regional areas outside the Seoul metropolitan area.
"The National Growth Fund has been injecting vitality into advanced industry sites with bold and rapid disbursements," Lee said. "Private financial institutions have also begun to move toward risk-bearing alongside companies. The fact that more than half of the support has gone to regional areas, widening the investment channel for advanced regional firms, is also a significant outcome."
The government sees an overhaul of how Korea's financial system operates as necessary to support advanced strategic industries, which it considers too capital intensive and risky for traditional finance to handle alone.
"Advanced industries involve massive amounts of capital, long investment-recovery periods and high uncertainty," Lee said. “It is hard to survive the global race for technological supremacy with collateral-based, short-term-profit-focused finance alone, as in the past."
"Finance now has to go beyond staying in safe assets and move toward looking at future potential and sharing risk with companies," he added.
Financial Services Commission Chairman Lee Eog-weon, third from left, poses with banking executives at the signing ceremony and seminar for the National Growth Fund at the Korea Development Bank's IR Center in Yeongdeungpo District, western Seoul, on May 18. [NEWS1]
Lee also promoted the National Participation Growth Fund, a retail product launching Friday that lets ordinary investors buy into the advanced industry pipeline.
The fund offers income tax deductions and separate taxation on dividend income.
The government will absorb a portion of losses on a first-loss basis. At least 20 percent of the total volume has been reserved for low-income investors with yearly earnings below 50 million won to broaden retail access.
Speakers at the seminar also pushed back at critics who argue that large-scale government investment risks crowding out private capital.
"There is criticism that large-scale government investment may dampen private investment, but in advanced industries, leaving things to the market alone actually tends to result in underinvestment," said Lee Byung-yoon, a senior research fellow at the Korea Institute of Finance.
"When the government takes on some of the risk as a subordinated investor, the actual investment risk from the private sector's perspective falls. Combined with the signaling effect of a government-backed project, that can amplify the incentive for private investment."
Ahead of the seminar, the Korea Development Bank signed a memorandum of understanding with BNK Financial Group, iM Financial Group, JB Financial Group and Suhyup Bank to identify regional growth projects and expand joint investment using the National Growth Fund.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
댓글
0