The initiative, led by the Ministry of Economy and Finance, will be managed within the state-run Korea Development Bank (KDB). The fund will be financed through government-guaranteed bonds, marking a significant push to strengthen the nation’s position in critical industries.
“When matched with private capital, the fund will generate about twice the support effect,” an official from the Financial Services Commission’s industrial finance division said. “As a subordinated investor, the fund will help mitigate risks for private banks, providing a strong incentive for their participation.”
The initiative will target ten strategic sectors: semiconductors, secondary batteries, displays, biotechnology, defense, vaccines, robotics, hydrogen, future vehicles, and artificial intelligence.
Unlike conventional industrial subsidies, the fund will deploy a variety of financial mechanisms, including ultra-low-interest loans pegged to government bond rates and equity investments through special-purpose companies (SPCs) designed for long-term infrastructure and technology development.
For industries requiring large-scale production facilities — such as semiconductor fabrication plants — the KDB will establish SPCs in partnership with recipient companies, maintaining partial ownership stakes in these ventures.
Additionally, the fund will support export-oriented defense firms that possess advanced technology but have faced challenges in securing international contracts due to financial constraints.
The government aims to submit amendments to the Korea Development Bank Act later this month, with the goal of providing financial support to domestic firms by year’s end.
Kang Ki-ryong, director of the policy coordination bureau at the Ministry of Economy and Finance, expressed confidence in the initiative’s swift implementation.
“We hope that the bill and the guarantee approval will pass promptly, allowing the fund to deliver tangible support within this year,” Kang said.
Copyright ⓒ Aju Press All rights reserved.
View more comments