South Korea Launches ₩150 Trillion National Growth Fund to Fuel Strategic Industries
South Korea is mobilizing a ₩150 trillion (approximately $115 billion USD) National Growth Fund, as detailed in a plan released by the Financial Services Commission on October 10th.The fund aims to bolster key strategic industries and drive economic growth, fulfilling a core pledge of President Lee’s “3, 3, 5” vision - becoming a top 3 AI power, achieving a 3% potential growth rate, and ranking among the world’s 5 largest economies.
The fund will be comprised of ₩75 trillion from private sources – including financial companies, pension funds, and individual citizens – alongside a ₩75 trillion Advanced Strategic Industry Fund already established within the Industrial Bank. To encourage private sector investment, the government is offering a subordinate role, absorbing initial losses. The government has allocated ₩1 trillion from the next year’s budget to initiate the fund.
The National Growth Fund will prioritize investment in nine advanced strategic industries: AI, Bio, semiconductors, Secondary Batteries, Future Cars, Robots, Hydrogen, Displays, and Defense. AI will receive the largest allocation, totaling ₩30 trillion. Notable funding will also be directed towards Semiconductors (₩20 trillion), Mobility (₩1.5 trillion), Bio and Vaccines (₩11.6 trillion), and Secondary Batteries (₩7.9 trillion).
Vice chairman kwon Dae-young of the Financial Services Commission emphasized a focus on “mega projects” with substantial industrial impact, citing examples like AI data centers, energy infrastructure, semiconductor progress, bio-industries, shipbuilding, and content creation as key areas for investment.
The fund will employ a variety of investment strategies, including direct equity investments, indirect investments, infrastructure funding, and low-interest loans (2% per annum). This includes supporting the establishment of new corporations and factories requiring large capital investments, as well as facilitating mergers and acquisitions. A dedicated ultra-long-term technology investment fund, centered around technology companies, will also be created, alongside a ₩5 trillion national participatory fund.
The fund’s launch is anticipated in the first half of next year, with the Advanced strategic Industry Fund becoming operational in early December.
The government views the National Growth Fund as a catalyst for shifting towards “productive finance,” encouraging financial institutions to prioritize investment over customary lending practices like mortgage loans. Regulations concerning financial soundness and management are being reviewed to remove potential barriers to investment.
However, officials acknowledge the need for additional incentives, such as tax benefits, to ensure the fund’s long-term sustainability and attract continued private participation. Industry leaders stress the importance of maximizing fund returns through effective operational strategies. This initiative represents a significant national effort - an “innovation war without a gunshot” – to mobilize capacity and secure South Korea’s position in the global technology landscape.
