Koo Yun-cheol: “Next Year’s Economic Growth Rate Projected at 1.8%+α ... Sovereign Wealth Fund Will Differ from KIC”

[Financial News] Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, announced on the 11th that the government will innovate its approach to economic policy in order to achieve an economic growth rate of at least 1.8% next year. To this end, a Korean-style sovereign wealth fund will be utilized to actively invest across industries such as real estate and biotechnology, and regulations on semiconductor companies will be eased to encourage investment in advanced industries.
At a press briefing held at the Government Complex Sejong, Koo Yun-cheol declared, “Next year will mark a new leap forward for the Korean economy,” as he outlined six key policy priorities.
The six core priorities are: strengthening economic policy planning and coordination; boosting potential growth; actively addressing livelihood stability and polarization; strategic global economic cooperation; proactive creation of national wealth; and innovation in fiscal, tax, and public sectors.
The Ministry of Economy and Finance plans to establish a Korean-style sovereign wealth fund by the first half of next year. This fund will be a large-scale investment vehicle that pools and manages state-owned assets. The Korean sovereign wealth fund will be modeled after overseas examples such as Temasek Holdings in Singapore and the Future Fund in Australia.
Additionally, to prevent indiscriminate privatization of government assets, the ministry will introduce a requirement for prior parliamentary consent when selling public institution shares, and mandate parliamentary reporting for sales exceeding 30 billion won.
When asked about the differences from the Korea Investment Corporation (KIC), Koo Yun-cheol explained, “KIC is based on foreign exchange reserves and is limited in its ability to take bold investment actions, whereas the Korean sovereign wealth fund can make aggressive investments in areas like biotechnology and real estate if the opportunities are promising.” He added, “We can create a virtuous cycle by acquiring promising overseas companies through M&A or investing before IPOs to generate national wealth.”
He emphasized, “Temasek Holdings in Singapore started with just $200 million, but has now grown to $320 billion. Similarly, the Korean sovereign wealth fund can start small and grow significantly over time.” The ministry aims to prepare relevant legislation in the first half of the year and focus on maximizing returns.
Institutional reforms to promote investment in advanced industries were also presented. The Ministry of Economy and Finance will relax the mandatory shareholding ratio for sub-subsidiaries of general holding companies from 100% to over 50%. However, this will be contingent on linking investments to regional development and obtaining approval from the Korea Fair Trade Commission (KFTC).
Koo Yun-cheol explained, “Strategic investment in advanced industries must be linked to regional areas to achieve balanced development and ease concentration in the capital region.”
Regarding concerns about conflicts of interest in internal transactions among affiliates, he said, “This is precisely why the KFTC conducts prior reviews and approvals,” adding, “This decision is aimed at enabling domestic companies to compete with global big tech firms.”
The ministry also plans to proactively address long-term national challenges and risk management, including Artificial Intelligence (AI). To this end, dedicated task forces for each sector will be established by December, and fundamental innovation plans will be formulated in the first half of next year.
Koo Yun-cheol stressed, “With the launch of the Ministry of Finance and Economy and the Ministry of Planning and Budget in January, the Ministry of Economy and Finance will seek a paradigm shift in the way economic policies are implemented. We will ensure that the Korean economy returns to a growth trajectory and that the benefits are felt in the daily lives of our people.”
hippo@fnnews.com Kim Chan-mi Reporter