South Korea’s “big move” in financial reform: expanding the size of the National Growth Fund to 200 trillion won

South Korea’s “big move” in financial reform: expanding the size of the National Growth Fund to 200 trillion won.

On Wednesday (July 15), South Korea’s Financial Services Commission (FCS) announced a plan to promote “financial structural reform” in its second quarter presidential work report.

FCS Chairman Lee Eog-weon said, "We will promote financial structural reform with greater intensity and faster speed to help build an irreplaceable Korea." The most important item in the reform plan is to expand the scale of the National Growth Fund from 150 trillion won to 200 trillion won (approximately US$134.6 billion), and establish a specialized management agency to invest up to 10 trillion won in national strategic technology fields.

Specifically, the annual operating scale of the National Growth Fund, which aims to promote the development of advanced industries, will expand from 30 trillion won to 40 trillion won, which means that the total operating scale within five years will increase from the current 150 trillion won to 200 trillion won.

The investment targets will also be expanded to cover the aerospace industry in addition to the existing twelve major industries such as biology, artificial intelligence (AI), semiconductors, secondary batteries and robots. In addition, the scale of direct equity investment will also expand from 3 trillion won to more than 5 trillion won per year.

FCS also plans to establish a professional management company "Korea Strategic Technology Partners (KSTP)" to focus on long-term and large-scale investments. The government plans to invest up to 10 trillion won over the next five years through KSTP, with 1 to 2 trillion won allocated annually.

Investment targets include basic technologies that may reshape future industries, such as quantum computing, next-generation artificial intelligence semiconductors and biological digital twin technologies, as well as core technologies that are highly dependent on foreign countries, including defense semiconductors, ultra-large offshore wind turbines and rare earth refining technologies.

A source at FCS said, "It may take 10 to 20 years for technology to be commercialized and transformed into industrial competitiveness.

We will not shy away from investment due to the potential risk of failure, but will provide patient capital in the long term." At the same time, the FCS also proposed to expand financial inclusion as another key direction of its policy in the second half of the year.

It plans to launch a new policy financial product, providing a 1 million won loan with a maximum of 10 years and an annual interest rate of 4.5%.

In addition, if borrowers repay a small loan of 1 million won on time, they can also apply for follow-up policy financial products worth 5 million won, as well as "ladder loans", a policy-based low-income financial product linked to banking business.

An FCS source said, "The system will be designed so that borrowers can repay approximately 10,000 won per month.

We will not only provide loans but also connect borrowers with welfare services during the counseling process to prevent the economic crisis for vulnerable groups from worsening." The South Korean authorities will also implement an "interest return" system to refund half of the interest paid to borrowers who repay policy loans on time.

In addition, financial support for youth will also be further expanded. A "Promising Youth Entrepreneurship Guaranteed Loan" with a scale of 200 billion won will be launched in August, which will provide preferential interest rates and guarantee fees.

Applicants under 39 years old and with up to seven years of business experience can enjoy an interest rate reduction of 1.5 percentage points and a 100% guarantee. (

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