South Korea's New Deal Budget to Invest 20 Trillion Won Next Year (Comprehensive Report 1)

Budget Proposal Submission on the 3rd of Next Month... Discovery of 137 Public Institutions + a Projects

[Image source=Yonhap News]

[Asia Economy Reporters Kwangho Lee and Sehee Jang] The government will invest 20 trillion won next year in the national power consolidation project, the 'Korean New Deal.' Through public institutions, it plans to discover 137+α projects and focus on fostering industries such as renewable energy and non-face-to-face public services. Additionally, a 400 billion won Industrial Intelligence Fund will be established to concentrate investment in leading digital innovation companies and support promising early-stage enterprises.

On the 20th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated at the 2nd Korean New Deal Ministerial Meeting and the 14th Emergency Economic Central Countermeasures Headquarters (Economic Central Headquarters) meeting held at the Korea Eximbank in Yeouido, Seoul, "We will reflect fiscal support requirements exceeding 20 trillion won in the 2021 budget for the Korean New Deal." The government plans to submit next year's budget proposal to the National Assembly on the 3rd of next month. The meeting discussed next year's fiscal investment plans and the establishment of a citizen-participation Korean New Deal fund.

Deputy Prime Minister Hong said, "The Korean New Deal will be vigorously promoted in a way that comprehensive synergy effects operate between government finances and private funds, capital investment and institutional reform, and between the central and local governments." He added, "A Korean New Deal legal and institutional reform task force (TF) has been formed and is operating, so we will accelerate deregulation and legislation."

The government decided to strengthen the role of public institutions to activate initial investment in the Korean New Deal. It selected 40 key management projects for oversight and 137+a autonomous diffusion projects. This aims to accelerate performance creation amid the investment slowdown caused by the COVID-19 pandemic.

For example, Korea Railroad Corporation will build a Korea Railroad-type data system to support industries related to electronic payments and transportation cards. The Korea Health Industry Development Institute will establish an open laboratory for pandemic response product development, and Korea Airports Corporation will promote infrastructure construction centered on the comprehensive transportation transfer facility at Gimpo Airport. Other autonomous diffusion projects include ▲ consulting support for companies utilizing Korea Electric Power Corporation’s power data sharing center ▲ construction of Incheon Port smart logistics center by Incheon Port Authority ▲ operation of an occupational disease risk prediction system based on a big data platform by the Korea Occupational Safety and Health Agency.

The 'New Deal Fund' to guide private liquidity into productive investments will also be announced soon. However, the government will not guarantee a fixed return. Kim Yong-beom, 1st Vice Minister of the Ministry of Economy and Finance, said, "The New Deal Fund does not directly guarantee a fixed return," adding, "We are reviewing the establishment of a fund structure that is more stable and profitable for the public." Initially, the ruling party and government argued that the New Deal Fund should provide a basic return of around 3% plus tax benefits to enable higher returns, but the government is considering increasing tax benefits rather than guaranteeing returns. The New Deal Fund envisioned by the government will be a project-specific fund for Korean New Deal businesses such as Digital New Deal and Green New Deal, sold through financial companies to allow anyone to invest.

On the same day, the Ministry of Trade, Industry and Energy announced the 'Digital-based Industrial Innovation Growth Strategy,' centered on establishing a 400 billion won Industrial Intelligence Fund. Deputy Prime Minister Hong said, "We will establish the Industrial Intelligence Fund and institutionalize data utilization by standardizing data and revising data transaction guidelines," adding, "We will actively support the training of industrial AI talent, including researchers with master's and doctoral degrees." He continued, "We will build a 'data dam' in the industrial sector to help innovate supply chains and create new products and services," and added, "We will expand industry-specific industrial data platforms and support problem-solving for companies through intra- and inter-industry collaboration."

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