During a televised policy briefing to President Lee Jae Myung on Thursday, Deputy Prime Minister and Finance Minister Koo Yun-cheol outlined plans for a fund modeled on Singapore’s Temasek and Australia’s Future Fund. The vehicle, he said, would support large-scale projects in AI and semiconductors and pursue more aggressive equity investments than traditional policy funds.
“By benchmarking Singapore’s Temasek, we aim to expand into proactive equity investment,” Koo said, signaling a shift from Korea’s long-standing preference for indirect or credit-based industrial support.
In theory, South Korea already has a sovereign wealth fund. The Korea Investment Corporation (KIC), established in 2005 under former President Roh Moo-hyun and modeled on Singapore’s GIC, manages part of the country’s foreign-exchange reserves. Born out of lessons from the 1997 Asian financial crisis, KIC’s mandate has been conservative by design: to safeguard and reinforce foreign-currency assets through overseas investment.
Koo’s proposal would mark a clear departure. The envisioned fund would add a domestic investment portfolio, channeling capital directly into Korean AI, chip and next-generation technology companies — a role KIC has never played.
Uncertainty over execution
Despite the political signaling, the contours of the new fund remain opaque. Its scope, target investments, funding sources and staffing have yet to be clearly defined, and even within the Ministry of Economy and Finance (MOEF), clarity appears limited.
“We can only confirm that the New Growth Policy Division is currently responsible for the fund’s composition,” a MOEF official said on condition of anonymity.
KIC, for its part, has not been consulted. A KIC official said the institution has received no notice of any expanded mandate or involvement.
One idea floated by Koo involves allowing majority shareholders to pay inheritance taxes with listed shares rather than cash. The approach would ease liquidity pressure on business heirs while enabling the state to accumulate and actively manage equity assets. How such shares would be pooled, governed or deployed, however, has yet to be spelled out.
Governance remains another unresolved issue. Unlike Saudi Arabia’s Public Investment Fund, where Crown Prince Mohammed bin Salman wields direct authority, or Temasek, which operates under Singapore’s Ministry of Finance with a clear legal and managerial structure, it is still unclear where a Korean sovereign growth fund would sit within the bureaucracy — or how insulated it would be from political cycles.
Sustainability is a further concern. Previous administrations launched policy funds that were later dismantled or downsized. The Lee Myung-bak government’s “Resource Diplomacy Fund,” aimed at securing overseas energy and natural resources, was wound down after heavy losses. The Park Geun-hye administration’s “Unification Fund” and the Moon Jae-in government’s “K-New Deal Fund” were likewise shelved as political priorities shifted.
The latest proposal also overlaps with initiatives already underway. Earlier Thursday, the Financial Services Commission launched the National Growth Fund, appointing FSC Chairman Lee Eog-weon, Mirae Asset Group Chairman Park Hyun-joo and Celltrion Chairman Seo Jung-jin as co-chairs of its steering committee.
Formed hastily in mid-December, the fund is set to reach 150 trillion won ($101.8 billion) over five years, split evenly between government-guaranteed bonds and private capital. Of that total, 30 trillion won is earmarked for AI and 21 trillion won for semiconductors. A deliberation committee is expected to finalize next year’s operational plan later this year.
Whether Seoul’s renewed interest in sovereign-style investing results in a durable Temasek-like institution — or becomes another short-lived policy experiment — will hinge on governance, continuity and the government’s ability to clearly define how this new vehicle fits into Korea’s already crowded landscape of growth funds.
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