"150 Trillion Won in Policy Finance to Be Concentrated in Five Key Sectors Including Advanced Industries"

Financial Services Commission Holds 13th Policy Finance Support Council
150 Trillion Won to Be Invested in Five Key Sectors Next Year, an 8.9% Increase from This Year
Over 40% of Policy Finance to Be Invested in Regional Areas to Promote Balance

Next year, the government will focus policy finance investments of 150 trillion won in five major priority sectors, including advanced strategic industries, future industries, and venture businesses. More than 40% of policy finance will be allocated to regional areas to promote balanced development.

150 Trillion Won to Be Concentrated in Five Key Sectors Next Year, an 8.9% Increase from This Year

The Financial Services Commission announced on December 24 that it held the 13th Policy Finance Support Council at Front One in Mapo-gu, Seoul, together with related ministries and policy finance institutions, to review this year’s policy finance supply and finalize next year’s sector-specific policy finance supply plans.

On this day, four policy finance institutions-Korea Development Bank, Industrial Bank of Korea, Korea Credit Guarantee Fund, and Korea Technology Finance Corporation-set the total supply of policy finance for next year at 252 trillion won. This is an increase of 1.8% compared to this year’s supply of 247.3 trillion won.

The most notable feature of next year’s policy finance is that 150 trillion won, or 60% of the total supply, will be concentrated in five major strategic sectors, including advanced strategic industries and promising future industries. This amount is up 8.9% from the 138 trillion won allocated this year.

Among the five priority sectors, the largest amount-42.5 trillion won-will be invested in fostering advanced strategic industries such as semiconductors, displays, secondary batteries, future vehicles, nuclear power, and core minerals (newly added). Another 24.7 trillion won will be allocated to supporting promising future industries, including nanotechnology, hydrogen, content, information and communication technology (ICT), solar cells, and wind power (newly added).

Additionally, 32.2 trillion won will be invested in restructuring and upgrading traditional industries such as auto parts, shipbuilding, steel, refining, and textiles. Support funds totaling 19 trillion won will be provided to help high-growth potential ventures become unicorn companies. Another 31.8 trillion won will be supplied to help companies overcome management difficulties caused by worsening external conditions.

This supply plan was developed based on demand surveys from each ministry, collected at the 12th Policy Finance Support Council held on October 31. Reflecting the results, core minerals and renewable energy (wind power) have been newly added as priority industries for next year. Support for animal pharmaceuticals and the pet industry in the agri-food sector will also be expanded, in response to the growing pet-owning population and related industry expansion.

Kwon Daeyoung, Vice Chairman of the Financial Services Commission, emphasized, "Next year, the role and responsibility of policy finance to support the growth engine of our economy is more important than ever. We will focus more on the five priority sectors and provide over 150 trillion won in funding, a significant increase from this year."

He added, "The 150 trillion won supply plan for priority sectors is separate from the National Growth Fund, which will be fully operational from next year. In addition to the supply plans of the four institutions, the National Growth Fund will provide more than 30 trillion won annually to the entire ecosystem related to advanced strategic industries starting next year." According to the Financial Services Commission, the National Growth Fund will differentiate itself from policy finance by supporting mega projects with significant industry-wide impact, long-term equity investments, and risk-sharing initiatives.

More Than 40% of Policy Finance to Be Invested in Regional Areas to Promote Balanced Development

It is also noteworthy that more than 40% of policy finance will be invested in regional areas. In line with the “Plan to Promote Local-Focused Finance,” announced by the government in October, a new target system for expanding regional policy finance supply will be implemented starting next year.

The government plans to gradually increase the regional supply ratio of policy finance, which is currently around 40%, to 45% by 2028. Accordingly, next year, the regional supply ratio is expected to rise to at least 41.7%. Vice Chairman Kwon stated, "From next year, with the implementation of the regional supply expansion target system, 106 trillion won, or 41.7% of total policy finance, will be supplied to regional industries."

At the council, the Financial Services Commission also shared next year’s operational plans for the National Growth Fund with relevant ministries and local governments. Detailed operational plans for 7 trillion won in indirect investment (policy funds) under the National Growth Fund were discussed.

The National Growth Fund will consist of a general-purpose fund to broadly support advanced strategic industries, a dedicated scaling-up fund, industry funds for sectors such as artificial intelligence (AI) and semiconductors, and regional funds, all aimed at revitalizing industry. To ensure swift fund allocation, the recruitment of master fund managers will begin in January next year, marking the start of fundraising activities.

Vice Chairman Kwon stressed, "Close communication and collaboration between the Financial Services Commission, which oversees finance, and industrial ministries with a deep understanding of the field, are essential for the efficient supply of policy finance and the successful investment of the National Growth Fund next year."