Hong Nam-ki: "New Deal Fund to be Established by March Next Year... 30% Investment in Infrastructure, 70% in Companies" (Update)

Deputy Prime Minister Hong Nam-ki Chairs the 23rd Emergency Economic Central Countermeasures Headquarters Meeting

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the 'Emergency Economic Central Countermeasures Headquarters Meeting and Korean New Deal Related Ministers Meeting' held on the 23rd at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy Reporter Kim Hyunjung] The government’s policy-type New Deal fund, which aims to raise a total of 20 trillion won by 2025, will be actively established starting from March next year. The government plans to invest up to 30% in New Deal infrastructure and the remainder in New Deal-related companies, while attracting investors through incentives such as extending the fund operation period and increasing the policy investment ratio.

On the 23rd, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, presided over the "23rd Emergency Economic Central Countermeasures Headquarters Meeting and the 7th Korean New Deal Ministerial Meeting" at the Seoul Government Complex and stated in his opening remarks, "We will finalize follow-up measures such as fund resource allocation and private sector inducement systems ahead of the sub-fund recruitment announcement at the end of this year so that fund formation can be fully launched from March next year."

Deputy Prime Minister Hong explained, "We will establish the policy-type New Deal fund through government investment and private matching, investing up to 30% (10-30%) in New Deal infrastructure and the remaining 70-90% in New Deal-related companies," adding, "We plan to operate an investment proposal-type fund that invests more than 50% in six core industries including DNA, and a growth-type fund that supports corporate scale-up through mergers and acquisitions (M&A), research and development (R&D), etc."

Regarding investment inducement measures, he emphasized, "To encourage long-term and venture investments by private capital and prevent concentration, we will allow the fund operation period to be extended up to 20 years (typically 7-8 years) in necessary areas in addition to the government’s subordinated investment," and "We will provide incentives such as raising the policy investment ratio up to 45% (average 35%) depending on investment necessity and risk, and lowering the performance fee payment hurdle rate to a maximum of 4% (typically around 7%)."

He also added, "We will first establish a private placement fund with public re-investment participation by the general public at a scale of 140 billion won in 2021, and to actively encourage public participation, we will raise the government’s subordinated investment ratio up to 20% (average 10%)."

Regarding the spread of the novel coronavirus disease (COVID-19) on the same day, Deputy Prime Minister Hong stressed, "For both quarantine and the economy, we earnestly request that everyone comply with quarantine measures in a united manner as the current 2.5+α level is being strongly enforced and that we take all-out measures during the year-end and New Year period."

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