Planning and Finance Committee Holds Public Hearing on 'Strategic Export Finance Support Act'... Key Issues: Corporate Contributions and Execution Criteria

The National Assembly is accelerating efforts to introduce a separate financial support system to back exports of strategic industries such as defense and nuclear power. The plan is for the government to directly support strategic sectors like the K-Defense industry, and to recover a portion of the profits from beneficiary companies as contributions, which would then be reinvested into the industrial ecosystem. However, there are still considerable disagreements over how the fund will be established, as well as over the standards and execution of contribution assessments.

On April 29, the National Assembly’s Committee on Budget and Economy held a plenary session and hosted a public hearing on the “Strategic Export Finance Support Act.” The two bills, sponsored by Assembly members Han Jeongae and Ahn Dogeol, respectively, propose a structure in which the government provides financial support-such as long-term loans and guarantees-to strategic export companies, and recoups a portion of export profits as contributions to be used across the industry. While support has so far focused on the Export-Import Bank of Korea and Korea Trade Insurance Corporation, the legislative intent is to address institutional limitations that have surfaced alongside the expansion of exports.

On April 29, a public hearing on the enactment of the Strategic Export Finance Support Act is being held by the National Assembly's Committee on Budget and Economy Planning. 2026.4.29 Photo by Hyunmin Kim

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The government has cited, for example, its approximately $44 billion defense contract with Poland signed in 2022, underscoring the need to secure separate sources of funding. Under the current system, policy financial institutions are only permitted to extend credit up to 40% of their equity capital to a single company. As a result, there are constraints when it comes to supporting mega-scale orders.

The government and the ruling party maintain that the rapid establishment of a “Strategic Export Finance Fund” is necessary to respond to large-scale order competition. They argue that, since the defense industry operates through government-corporate cooperation, some level of corporate contribution is inevitable.

By contrast, the opposition parties are pushing back, arguing that mandatory contributions could undermine the export competitiveness of defense firms. They contend that adjusting the credit limits of existing policy financial institutions would be sufficient to address the issue. In addition, they have raised concerns about potential double burdens for companies, pointing to overlap with the Act on the Development and Support of the Defense Industry, which is pending in the National Defense Committee.

Assemblyman Kim Younghwan of the Democratic Party of Korea stated, “Defense exports involve various opportunity costs in the process of government guarantees and financing,” and emphasized, “An approach that considers even the invisible costs, such as government diplomatic and R&D support, is needed.” He argued that, considering the government’s public support, it is necessary for companies to return a certain portion of their profits as contributions.

Professor Hunchul Kwon from the Department of Defense Economics at Korea National Defense University is speaking at the public hearing on the enactment of the Act on Strategic Export Finance Support held at the National Assembly's National Budget and Economy Committee on the 29th. From the right: Professor Hunchul Kwon of Korea National Defense University, lawyer Inyong Park of Yulchon LLC Defense and Aerospace Team, senior research fellow Changgyun Park of the Korea Capital Market Institute, and head Sangnam Ahn of the Korea Defense Industry Promotion Association. April 29, 2026. Photo by Hyunmin Kim.

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Assemblyman Park Sunghoon of the People Power Party pointed out, “The contributions expressed in the bill are essentially quasi-taxes,” adding, “There needs to be a differentiated assessment standard that considers the size and risk profile of beneficiary companies. The specific contribution rates and relevant circumstances should be thoroughly reflected in the legislation.”

The defense industry has raised issues regarding the gap between the burden of contributions and the use of funds. Although the burden on the defense sector increases in proportion to its revenue share, the scope of fund use is defined as spanning all ‘strategic industries.’

Sangnam Ahn, head of the Korea Defense Industry Promotion Association, stated, “It is necessary to restrict the use of the fund to the defense sector,” adding, “Furthermore, if companies’ rights to the contributions are recognized, it would enable them to use these rights as collateral for financing.” Attorney Inyong Park of Yulchon LLC also commented, “It is worth considering either specializing the use of contributions for the defense sector or enacting a separate development law.”

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