New Deal Fund Includes Pension Funds and KEPCO... Lee Kwang-jae Calls It an "Opportunity to Raise National Income"

Lee Kwang-jae, Member of the Democratic Party of Korea./Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Park Cheol-eung] The Korean New Deal infrastructure fund, promoted by the government and ruling party, is expected to target the general public while also allowing participation from institutions such as pension funds. Korea Electric Power Corporation (KEPCO) can participate as an investor in power generation projects like solar and wind power. Additionally, tax benefits will be provided to enable citizens to earn stable income during this period of great transition.

On the 17th, Lee Kwang-jae, a member of the Democratic Party of Korea, said in a phone interview with Asia Economy, "The national budget is about 500 trillion won, but private financial institutions manage funds worth about 8,000 trillion won. The infrastructure fund is about the government providing seed money for the Korean New Deal projects and combining it with massive private liquidity. By granting tax benefits, it will offer citizens an opportunity to earn money while overcoming the economic crisis and transitioning through this era." Lee is preparing a revision bill to the Restriction of Special Taxation Act to provide tax benefits for the infrastructure fund.

He added, "For example, a fund can be created based on the profits from large-scale offshore wind power projects. Pension funds can be investors, and if KEPCO participates, it will also ensure stability."

GS, which operates wind power projects, presented a business model at the Energy Transition Forum’s press briefing in May, proposing to raise 70% of the shares of wind power plants through project financing (PF) such as pension fund investments, and the remaining 30% through participation by citizens, local residents, local governments, and companies.

Lee, chairman of the Digital New Deal Subcommittee of the Democratic Party’s K-New Deal Committee, has been refining the infrastructure fund concept and officially proposed it during a closed-door discussion after the Korean New Deal National Report Conference on the 14th. On the 16th, President Moon Jae-in stated during a reception after his National Assembly opening speech, "Since the financial sector has enjoyed a long boom, we plan to create a private fund utilizing financial assets and private capital to promote the Korean New Deal projects." This was in response to remarks by Kim Jong-in, emergency committee chairman of the United Future Party, who questioned whether there would be sufficient funding for the Korean New Deal.

The digital sector’s Korean New Deal projects such as the data dam, data centers, digital education content, 5th generation mobile communication (5G), and digitalization of social overhead capital (SOC) could all be targets. Lee said, "Relevant government ministries and the private sector can jointly identify project targets. For 5G, the telecommunications industry can be considered, and for data, companies like Naver or Kakao come to mind."

A fund model could also be applied to the digitization of 1.25 million academic journals and books held by the National Assembly and the Central Library. Lee said, "A massive investment is needed for an educational Netflix-type project that brings vast library materials into school classrooms, and various revenue-generating businesses will emerge in the process."

The green sector is represented by renewable energy power generation projects. Unlike the digital sector, it does not require creating new models, so the infrastructure fund formation seems possible relatively early.

Lee said, "An infrastructure fund promotion system must be established within the government, and we will continue to fill in the specific details."

This content was produced with the assistance of AI translation services.