[Exclusive] Korea Development Bank Begins Preparations for Advanced Strategic Industry Fund with Launch of Preparatory Committee

Composed of One Department and Two Teams, Totaling 17 Members
Preparing for Legal Amendments and Detailed Fund Operation Plans
Concerns Raised Within the Bank Over Potential Manpower Shortages

Korea Development Bank is busy preparing for the establishment of the Advanced Strategic Industry Fund, which will support South Korea's advanced industry ecosystem. The bank has formed a preparatory committee to devise detailed operational plans for the fund and is expected to complete the fund's establishment within this year. Within the bank, there is both anticipation that Korea Development Bank's role will expand, and concern about potential manpower shortages.

According to the financial sector on the 30th, Korea Development Bank began operations of the Advanced Strategic Industry Fund Preparatory Committee the previous day. To this end, on the 28th, employees from business departments were assigned to the committee. The committee operates with one department and two teams, comprising a total of 17 members: one chairperson, two team leaders, and 14 team members. The committee's main tasks are to respond to amendments to the Korea Development Bank Act and subsequent legislation, as well as to develop detailed operational plans for the fund. After the fund is established, the committee will also be responsible for building necessary IT infrastructure and handling relations with the National Assembly and government. The committee is expected to focus on external affairs until the Korea Development Bank amendment passes the National Assembly, and after the bill passes, it will work toward establishing the fund within the year. The operation of the fund will be managed by a newly established division within Korea Development Bank, and a new vice president is also expected to be appointed.

The Advanced Strategic Industry Fund is a financial support initiative promoted by the government to strengthen the competitiveness of advanced strategic industries, and it is expected to be created at a scale of 100 trillion won. Its main purpose is to broadly support all companies engaged in advanced strategic industries and national strategic technologies, as well as related infrastructure and technology, thereby supporting the entire industrial ecosystem. The supported sectors include semiconductors, secondary batteries, displays, bio, defense industry, vaccines, robotics, hydrogen, future vehicles, and artificial intelligence (AI). Funding will be secured by combining a 50 trillion won contribution from Korea Development Bank's own resources with government-guaranteed fund bonds. In addition, up to another 50 trillion won will be raised through funds established by private financial institutions. Beyond simple financial support, the fund will also provide support measures such as equity investment, subordinated enhancement, low-interest loans at the level of minimum government bonds, and financial packages for global order competition.

The bill to establish the fund is expected to pass the National Assembly in August. As the "Partial Amendment to the Korea Development Bank Act" was prepared through bipartisan agreement, it is also expected to pass smoothly at the Financial Services Committee plenary session scheduled for the afternoon of the same day. After discussion at the Legislation and Judiciary Committee, it is likely to be submitted to the plenary session as early as the middle of next month.

Meanwhile, regarding the establishment of the fund, there is both anticipation within the bank about the expanded role of Korea Development Bank as a policy financial institution, and concern that manpower shortages may worsen. This is because, due to the relocation of Korea Development Bank to Busan promoted by the Yoon Suk-yeol administration, many mid-level employees suitable for practical work have resigned. The expected manpower scale for the fund is predicted to be larger than that of the Key Industry Stabilization Fund (around 30 people), which was created to support key industries during the COVID-19 pandemic, and some expect it could reach up to 100 people. A Korea Development Bank official said, "Personnel are being dispatched from business departments to the committee, and this will be the same even after the fund is established," and added, "We are concerned about the shortage of experienced mid-level managers within the bank." According to Korea Development Bank's statistics on retirees by rank, from 2020 to last month, the number of retirees in the mid-level manager ranks (grades 3 and 4) was 93. This accounts for about 41% of the 228 retirees in grades 1 to 5.