Financial Services Commission Reports to President on the 19th
150 Trillion Won National Growth Fund to Be Launched in Earnest Next Year
Pushing Forward a Financial Transformation: Productive, Inclusive, and Trusted Finance
Lee Okwon, Chairman of the Financial Services Commission, is answering President Lee Jae-myung's question during the joint briefing of the Financial Services Commission and the Fair Trade Commission held at the Government Seoul Office Annex on the 19th. From left, Joo Byunggi, Chairman of the Fair Trade Commission; Lee Okwon, Chairman of the Financial Services Commission; Lee Chanjin, Governor of the Financial Supervisory Service. Photo by Yonhap News Agency
Lee Okwon, Chairman of the Financial Services Commission, announced that seven projects, including artificial intelligence (AI), semiconductors, and secondary batteries, have been selected as the first mega-projects to be supported by the 150 trillion won National Growth Fund.
AI, Semiconductors Among First Mega-Projects Selected for the National Growth Fund
During a presidential work report held at the Government Seoul Office on the 19th, Chairman Lee stated, "For the first round of mega-projects, we have selected seven candidates, including AI, semiconductors, and secondary batteries, which are expected to have a significant economic ripple effect across local regions and the entire industrial ecosystem."
The first investment destinations announced on this day include fostering a K-style Nvidia, a national AI computing center, offshore wind power in Jeonnam, an all-solid-state battery material factory in Ulsan, a power semiconductor production plant in Chungbuk, an advanced AI semiconductor foundry in Pyeongtaek, and energy infrastructure for the semiconductor cluster in Yongin.
The 150 trillion won National Growth Fund will broadly support advanced strategic industries such as AI, semiconductors, bio, and robotics, as well as their related ecosystems. Starting next year, the fund will supply 30 trillion won annually for the next five years.
More than 40% of the total National Growth Fund will be allocated to regional areas. The government will also promote the efficiency of policy finance, such as public guarantees to enhance industrial support, and advance the financial industry itself through AI transformation and other high-tech initiatives.
Support for regional economies, carbon reduction, and financial assistance for small business owners will also be strengthened to promote a sustainable economy. Regional finance will be improved to ensure more funds are supplied to local areas under better conditions, through measures such as increasing the target ratio of policy finance supplied to the regions (40% in 2025 to 45% in 2028) and regulatory reforms favoring localities.
For climate finance, the government plans to gradually expand the supply of policy finance while establishing ESG (Environmental, Social, Governance) disclosure standards and a roadmap to actively support the achievement of the national greenhouse gas reduction target (NDC) by 2035. In addition, the overall financial supply system for small business owners will be improved by establishing a credit evaluation model and an integrated information center for small businesses, and by revitalizing supply chain finance.
Lee Eokwon, Chairman of the Financial Services Commission, is giving a post-work briefing at the Government Seoul Office in Jongno-gu, Seoul on the 19th. Photo by Yonhap News
Inclusive Finance to Continue, Including Support for the Financially Marginalized
The Financial Services Commission will continue to promote inclusive finance next year by addressing structural issues such as the high interest burden and long-term or excessive debt collection faced by the financially marginalized, following this year's emergency measures such as the write-off of long-term delinquent bonds and credit amnesty.
To this end, the policy of providing low-interest (3-6%) policy finance for low-income individuals will continue next year. A new youth-exclusive microcredit product will be introduced, offering up to 5 million won at an annual interest rate of 4.5%. This loan product, which assesses potential rather than current ability, will support young people with funds for entering society (such as tuition fees and start-up capital). A similar loan product for living expenses will also be created for vulnerable groups under the same conditions. This product will provide living expense loans to recipients of basic livelihood benefits, near-poor households, socially disadvantaged groups, and those who have fully repaid illegal private loans.
Chairman Lee also pointed out that most household loans by banks are concentrated in mortgage loans, which carry little risk of default, and emphasized the need for improvement to promote productive finance.
This was in response to President Lee Jaemyung's remark that "domestic financial companies mainly lend money secured by land or houses and profit from the interest, which is like swimming with one's feet on the ground."
Chairman Lee stated, "Seventy percent of household loans by banks are mortgage loans. Since they are the easiest and least risky, there is a tendency to focus on them, but it is questionable how much they actually contribute to the Korean economy as a whole." He added that institutional reforms would be pursued.
He went on to say, "Issues regarding the governance structure of financial holding companies, including board independence and improvements to performance-based compensation, will be reviewed by forming a task force with experts and relevant organizations to seek improvement measures."
Expansion of Small Loans for Faithful Debt Restructuring Participants
The Financial Services Commission will also expand small loans for individuals faithfully participating in debt restructuring. The supply of such products will be increased more than threefold, from the current 120 billion won per year to 420 billion won per year, and the scope of eligible recipients will be expanded from current participants in the National Credit Counseling and Recovery Service and individual rehabilitation to include those participating in debt restructuring programs operated by other financial companies.
A tax-exempt Youth Future Savings product will be launched in June next year to help young people save seed money, and the reverse mortgage system will be improved to support asset formation by generation, ensuring stable retirement for the elderly.
Regarding household debt, the government announced that it will maintain a consistent approach next year, focusing on total volume management, advancing the loan management system centered on the Debt Service Ratio (DSR), and strengthening the management of large mortgage loans. Various market risk factors will be closely monitored, and preemptive market stabilization measures will be implemented if necessary.
To prevent a recurrence of hacking incidents, a "Digital Financial Safety Act" will be enacted, punitive fines will be introduced, and regular joint simulation drills and penetration testing within the financial sector will be conducted to establish a robust financial security system. A one-stop support system will also be established so that victims of illegal private loans can receive all necessary assistance, such as suspension of collection, appointment of a debtor representative, account suspension, and investigation, with just one report.
Chairman Lee emphasized, "Next year, we will pave the way for a major leap forward in the economy through a grand transformation of finance," and added, "We will create finance that truly benefits people's lives."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
