Fostering New Deal Infrastructure Funds... Asset Management Industry Expects Boost in Public Fund Activation

[Asia Economy Reporter Minji Lee] The asset management industry has generally welcomed the government's plan to establish a New Deal infrastructure fund. It is analyzed that opening the door for individuals to participate in the infrastructure sector, which has been difficult to access, through public offering funds will have a positive impact on public fund management companies.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, and Eun Sung-soo, Chairman of the Financial Services Commission, are announcing the 'Korean New Deal Financial Support Plan' at the government Seoul office briefing room on the 3rd. Photo by Moon Ho-nam munonam@

On the 3rd, the government announced plans to create the Korean New Deal Fund based on three pillars: ▲Policy-type New Deal Fund ▲Public Offering New Deal Infrastructure Fund ▲Private New Deal Fund. Among these, the Public Offering New Deal Infrastructure Fund will utilize the 'Policy-type New Deal Infrastructure Fund,' which is a mother fund of the 'Policy-type New Deal Fund,' and 586 infrastructure funds already managed in the private sector.

Tax benefits have also been dramatically increased. Initially, the tax law amendment proposed a separate taxation on dividend income at a 14% withholding tax rate up to 100 million KRW for investors in public infrastructure funds. However, for public infrastructure funds with investments exceeding a certain ratio (e.g., 50%), a low separate tax rate of 9% on dividend income will be applied up to an investment limit of 200 million KRW.

The asset management industry responded positively to the government's active intention to stimulate the New Deal Fund. An industry official said, "The government is actively preparing measures to provide investors with various opportunities for profit generation through finance," adding, "Strong tax benefits can serve as an incentive for capital inflow, so there is no reason for management companies to complain."

There is also anticipation that fostering the Public Offering New Deal Infrastructure Fund could lead to the revitalization of public offering funds. Since individuals will be able to access the infrastructure sector, which was previously difficult for the public to enter, through public offering funds, it is expected that capital inflow will increase. Furthermore, as products with strong tax benefits enter the sluggish public offering fund market, it is anticipated that this will bring warmth to other public offering funds as well. A financial investment industry official explained, "Investments in bridges, ports, solar power, and wind power have been centered on private equity funds, but opening the path for individuals to invest through public offering funds is positively evaluated," adding, "If infrastructure-related investment service products expand, it will also help the development of the asset management industry."

However, some voices warn that the 'Korean New Deal Fund' might end up as a flash in the pan. An asset management industry official expressed concern, saying, "Leaving it to market principles is necessary; trying to create it by providing incentives to the private sector is a risky move," and added, "In the case of the previous KOSDAQ Venture Fund, the government distributed money to support venture startups, but actual nurturing did not happen, and there were more cases of 'eat and run'."

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