[Q&A] Koo Yoonchul: "China's Rapid Semiconductor Pursuit Is Unsettling... Special U.S. Investment Law to Be Submitted to National Assembly This Month"

Koo Yooncheol Holds Press Conference in Sejong

On November 19, Koo Yoonchul, Deputy Prime Minister for Economy and Minister of Economy and Finance, stated, "As the head of the economic ministry, I get chills when I hear that even semiconductors are something China is trying to catch up with. It is unsettling."

During a press briefing held in Sejong that afternoon, Deputy Prime Minister Koo remarked, "I often think that China's pursuit is extremely fast," and added, "China is making every effort to surpass Korea in semiconductors."

Regarding investment plans in the United States, Deputy Prime Minister Koo said, "If Korea is to make investments of up to 20 billion dollars annually in the future, we need a fund to manage this. I believe a fund structure is most appropriate," and continued, "Rather than having the Ministry of Economy and Finance manage the fund directly, we are considering selecting a fund management entity with professional operational capabilities."

He emphasized, "We need to operate the Korean economy with a broader perspective and focus our capabilities and policy efforts on becoming a core part of the global value chain," and added, "In areas such as semiconductors, energy, biotechnology, artificial intelligence (AI), and quantum technology, where the United States is interested, we should proactively propose projects and take an active approach to secure the value chain for future growth engines together with the United States."

Deputy Prime Minister for Economy Koo Yoonchul holding a press briefing
(Sejong=Yonhap News) Photo by Bae Jaeman = On November 19, Koo Yoonchul, Deputy Prime Minister and Minister of Economy and Finance, held a press briefing with the press corps at the Ministry of Economy and Finance press room in the Government Complex Sejong. 2025.11.19
scoop@yna.co.kr (End)

The following is a Q&A with Deputy Prime Minister Koo Yoonchul.

Q. There is controversy over the establishment of a 'fund' or a 'public corporation' for investment in the United States. What structure are you considering?

A. To implement the agreed annual investment limit of 20 billion dollars with the United States, a 'fund' as a financial vehicle is appropriate. The entity that will manage the fund (the fund management organization) will be finalized through discussions within the government and the National Assembly, and no specific model has been decided yet.

Q. What is the difference between the Ministry of Economy and Finance managing the fund directly and establishing an independent public corporation?

A. Since executing investments in the United States involves areas outside of fiscal policy, such as utilizing foreign exchange reserves or overseas transfers, it is more reasonable to select a professional fund management entity rather than have the Ministry operate it alone. However, I believe the Ministry should not be completely excluded and should participate responsibly through a steering committee or similar body.

Q. When will the special law be submitted?

A. It must be submitted within November. According to discussions with the United States, tariff reductions can be applied from the first day of the submission month, so it is crucial to meet the deadline.

Q. What are the solutions to the high exchange rate issue? You mentioned that the exchange rate would fall after the tariff negotiations, but it is rising again.

A. Since the exchange rate is determined in the market by a combination of external and internal factors, it is not appropriate for the government to specify a level. Although the current account surplus is 90 billion dollars annually, the outflow overseas is even larger, resulting in a dollar shortage. The government is prioritizing the prevention of exchange rate uncertainty and instability through consultations with major foreign exchange market participants. Additional measures are still under review.

Q. Are there plans to provide foreign exchange incentives to exporting companies or to utilize the National Pension Service to stabilize the exchange rate?

A. We have explained the current situation to exporting companies and shared that the government is securing tariff reduction benefits through investments in the United States. There have been no specific discussions with the National Pension Service yet. The government will continue to monitor the situation and is prepared to take immediate stabilization measures if necessary.

Q. What is your outlook for the exchange rate level?

A. It is difficult to mention a specific level. However, the government is doing its utmost to ensure stability, taking into account exporters, importers, and prices.

Q. What are the plans for structurally improving the foreign exchange supply and demand, and what about the 'Crisis Task Force'?

A. The foreign exchange market is sensitive, so it is difficult to comment in detail. The Crisis Task Force has not yet been formed, and as long as duties are performed faithfully, there is no need for concern.

Q. What is the direction for tax benefits for long-term investors?

A. The purpose of long-term investment is twofold: to increase inflows into the overall capital market and to provide incentives to long-term investors in individual stocks. For long-term investment based on Individual Savings Accounts (ISA), we are moving toward providing incentives, and for individual stocks, we are reviewing incentives such as lower dividend tax rates for small shareholders, referencing past models like long-term stock savings.

Q. What is the government's position on separate taxation of dividend income and inheritance tax reform?

A. The current top tax rate on dividend income is 35%, and discussions are underway in the tax subcommittee to reduce this. The government is actively participating in National Assembly discussions in line with the goal of enhancing capital market value. There are also various discussions on inheritance tax, and we will work toward a reasonable conclusion.

Q. When will the long-term investment tax benefits be applied?

A. It will be difficult to implement within this year. We need to gather private sector opinions and set the scope, so our goal is to proceed swiftly next year.

Q. What is your assessment of SK Group and Korean Chamber of Commerce and Industry Chairman Chey Tae-won's proposal to ease the separation of industrial and financial capital?

A. If large-scale investments are needed in new industries such as semiconductors and AI, it is possible to consider easing the separation of industrial and financial capital within the limits that do not undermine its fundamental purpose. If it is difficult to raise funds through the National Growth Fund (150 trillion won), limited and exceptional easing can also be discussed with relevant ministries.

Q. Is there any possibility of discussions with the Fair Trade Commission or revisions to the Fair Trade Act?

A. Discussions have not yet progressed to the point of easing the separation of industrial and financial capital. If necessary, we will consult fully with relevant ministries, but as reported in some media, we are not at the stage of considering a comprehensive overhaul of the Fair Trade Act.

Q. Has anything unusual been found in the comprehensive review of state-owned assets?

A. All ministries are currently conducting a comprehensive review, and nothing unusual has been reported yet. Based on the results, we plan to announce institutional improvement measures in early to mid-December.

Q. Is there a need to expand the review to include local government assets?

A. Since local government assets fall under the jurisdiction of the Ministry of the Interior and Safety, we are willing to cooperate if necessary.

Q. What are the countermeasures for rising interest rates and bond market stability?

A. Although government bond yields have risen somewhat recently, the inclusion in the World Government Bond Index (WGBI) is expected to bring capital inflows from next year, contributing to market stability. The government is prepared to implement countermeasures immediately if necessary.

Q. Is the government considering stock market stimulus measures to achieve the KOSPI 5000 target?

A. Artificial stimulus measures are not being considered. The most reliable strategy is to enhance corporate competitiveness and boost potential growth rates, which will resolve the 'Korea discount' and increase the attractiveness of the stock market. The government plans to create this virtuous cycle through growth strategies and fiscal management.

Q. Are there concerns about an AI bubble?

A. There may be controversy over excessive investment in data centers and GPUs based on large language models (LLMs) in the United States, but since Korea is focused on manufacturing-based 'physical AI,' the possibility of a bubble is considered low.

Q. What is the internal assessment and future role of the Ministry of Economy and Finance after its restructuring?

A. This has already been decided, and there is no need to dwell on the past. Even though the budget function has been removed, new roles have been assigned, such as overseeing the six major structural reforms, coordinating between ministries, and developing future strategies. After announcing next year's growth strategy, the Ministry will strengthen its role as the 'Ministry of Economy and Finance' through inter-ministerial reviews and expanded communication with national research institutes and businesses.