Inducing Supply Chain Localization
Over 102 Trillion Won Supplied to 5 Key Strategic Areas
Mid-sized Company Guarantee Limit Expanded from 10 Billion to 30 Billion Won
Promotion of Regional Revitalization Investment Fund
The government will intensively provide policy financing to advanced industries such as deep tech. The plan includes not only investment in facilities and research and development (R&D) but also inducing localization of supply chains. Customized corporate financing for small and medium-sized enterprises (SMEs) and mid-sized companies will also be supported.
On the 17th, the Financial Services Commission announced this at the ‘Public Livelihood Discussion with the People’ presided over by President Yoon Seok-yeol at the Korea Exchange in Yeouido, Seoul. The intention is for policy financing and private financing to organically collaborate to actively support the real economy. First, the plan is to implement the policy financing supply plan worth 212 trillion won, which was decided by reflecting the demands of industrial ministries and the field. In particular, more than 102 trillion won will be concentrated in five key strategic areas, including ultra-gap fields and new growth industries.
Policy financing will also be concentrated on future growth industries such as deep tech and advanced technology sectors. In addition to the already established 3 trillion won Innovation Growth Fund, an additional 3 trillion won will be raised within this year. Long-term venture capital worth 15 trillion won will be supplied over five years to new industries and highly growth-oriented companies. Support will also be provided to advanced fields such as deep tech, where private participation is difficult, through Growth Ladder Fund 2. This fund has a virtuous cycle structure that reinvests funds recovered from existing investments, and 1 trillion won will be raised annually. The technology finance system will also be reformed so that companies with superior technology receive more financial benefits.
Measures for SMEs and mid-sized companies were also announced. To resolve difficulties in fundraising during the growth process, customized corporate financing jointly provided by policy and private sectors will be supported. A joint SME interest rate reduction program will be conducted by the banking sector, and a support program for SME re-startups will be introduced. The guarantee limit for mid-sized companies will be expanded from 10 billion won to 30 billion won, and exclusive funds and loans for mid-sized companies will be introduced. Factoring for mid-sized companies will also be strengthened. Factoring is a system where financial institutions purchase accounts receivable from companies and lend funds.
The Financial Services Commission will enhance corporate growth and competitiveness by utilizing capital market functions. The introduction of Business Development Companies (BDC) will support the growth of venture and innovative companies. This is an organization that fosters unicorn companies by raising large-scale private funds through public offerings to general investors via listing.
Financial support to respond to regional extinction crises and revitalize local economies will also be strengthened. A Regional Revitalization Investment Fund will be promoted to enable rapid implementation of projects desired by the regions. To raise the fund, the Korea Development Bank, local governments, and private financial institutions will cooperate to secure project costs worth 3 trillion won. The relocation of the Korea Development Bank to Busan will be smoothly promoted through amendments to the Korea Development Bank Act.
The Financial Services Commission has prepared measures for the development of the financial industry. It plans to provide generous support for innovation to advance services and create new services. This includes promoting the computerization of indemnity insurance claims, allowing entry of pet-specialized insurance companies, formally institutionalizing online deposit product brokerage services, launching and gradually expanding platform insurance product comparison and recommendation services. To foster fintech companies, it supports collaboration between fintech and financial companies through events to discover collaboration models.
It has also begun establishing regulatory frameworks for new fields such as digital. Regulatory directions for big tech groups in the financial sector will be prepared with international consistency. Regulatory frameworks for newly emerging assets will also be created. Representative examples include the institutionalization of token securities based on distributed ledgers and trust beneficiary certificates for fractional investments in music copyrights and artworks. A usability test will be conducted to verify the practical applicability and side effects of Central Bank Digital Currency (CBDC). The Virtual Asset User Protection Act will be implemented without delay to establish a regulatory framework for virtual assets, and additional regulatory matters for issuers and operators will be reviewed and prepared. For example, regulations on virtual asset business conduct, unification of standards for distribution and issuance volume, and strengthening of operator registration systems.
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