Kibo Joins Policy Finance Support Association... 240 Trillion Won in Policy Finance This Year

The Korea Technology Finance Corporation (Kibo) has joined the Policy Finance Support Council, which was formed by the financial authorities together with related ministries following the Industrial Bank of Korea, Korea Development Bank, and Korea Credit Guarantee Fund. As a result, the scale of policy finance to be supplied by the council this year will increase from the existing 212 trillion won to 240 trillion won.

Kim So-young, Vice Chairman of the Financial Services Commission, is delivering a congratulatory speech at the policy conference on "Key Tasks and Future Directions for Activating the Domestic Risk-Free Reference Rate (KOFR)" held on the 28th at the Bank of Korea in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

On the 25th, the Financial Services Commission announced that it held the 8th Policy Finance Support Council meeting at Front1 in Mapo, Seoul, chaired by Vice Chairman Kim So-young, with government ministries and policy finance institutions. The council was launched jointly by related ministries and policy finance institutions at the end of 2022 to supply policy finance more efficiently.

Vice Chairman Kim stated, “As industrial conditions become differentiated and funding demands diversify, policy finance is also becoming more segmented. The fact that the President personally chairs economic issue review meetings on semiconductors and that a cross-ministerial strategic industry task force is operating are examples of this.” She added, “The process of deciding annual policy finance supply plans by industry is becoming increasingly important, and we ask for active support to enable efficient allocation of policy finance next year as well.”

At the meeting, the first agenda was to discuss Kibo’s participation in the council. Kibo is an institution that actively supplies funds to small and medium-sized enterprises (SMEs) with insufficient collateral but high future growth potential. It plans to supply 28.5 trillion won in policy funds this year and is concentrating 13.6 trillion won in the five selected priority sectors of the council.

Vice Chairman Kim said, “With Kibo’s participation in the council, the policy finance support plan for the five priority sectors has been enriched from the existing 102 trillion won to 116 trillion won,” and expressed gratitude to the Ministry of SMEs and Startups and Kibo for their cooperation in joining the Policy Finance Support Council.

The council also discussed plans to collect opinions for establishing next year’s policy finance supply plan. Vice Chairman Kim said, “Overall, policy finance is being improved to be supplied efficiently to necessary industries and sectors, but there are criticisms that the scale is rapidly increasing and overlapping with the private sector.” She added, “Going forward, rather than focusing on expanding the scale, policy finance should be supplied more substantively to the necessary industries and sectors.”

She continued, “We plan to minimize the increase in total supply, focus supply on the five priority sectors reflecting each ministry’s industrial policies, and actively expand investment rather than simply focusing on loans.” Accordingly, each ministry plans to share its key projects and industry issues with the Financial Services Commission and policy finance institutions so that they can be reflected in the total supply plan and funding for the five priority sectors to be announced at the year-end council meeting.

The council also shared the performance analysis results of the Growth Support Fund, a fund financed by public funds. The analysis showed that due to worsening external environments such as COVID-19, the growth of both beneficiary companies and general companies declined after investment (2022?2023) compared to before investment (2016?2017). However, beneficiary companies showed higher growth than general companies after the investment period (2022?2023). On the other hand, the average operating profit margin and interest coverage ratio of beneficiary companies were lower compared to before investment and to general companies.

Vice Chairman Kim said, “Although the analysis period was immediately after experiencing COVID-19 and overall corporate performance was worse than in the past, beneficiary companies of the Growth Support Fund showed higher growth than general companies, indicating that the primary objective was achieved.” She added, “However, it is necessary to observe over a longer period whether the lowered average operating profit margin and interest coverage ratio can be considered a normal growth stage.”

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