South Korea strengthens support for cutting-edge strategic industries with a 58.5 trillion won national growth fund

Korea Development Bank and Shinhan Asset Management jointly announced the first phase of the National Growth Fund investment project on the 15th, marking the official entry of government-supported funds for cutting-edge strategic industries into the formation stage on the largest scale in history. This move aims to integrate previously operated funds such as the Innovation Growth Fund and the Semiconductor Ecosystem Fund into one, streamline the policy fund implementation system, and concentrate larger-scale funding.

The newly established National Growth Fund is a policy-oriented fund in the indirect investment sector, with a target size totaling 5.85 trillion won. Based on the original policy fund sources—fiscal funds and Korea Development Bank funds—its overall scale has significantly increased due to the large-scale participation of funds for cutting-edge strategic industries. Policy funds do not provide direct funding to companies from the government but supply funds to multiple companies and industries through operating companies, thus playing an important guiding role in attracting private investment.

To smoothly advance the fund formation, Korea Development Bank has decided to divide the funding project into Phase 1 and Phase 2. First, the policy fund for Phase 1 will amount to 3.9 trillion won, with the remaining funds gradually assembled through subsequent Phase 2 investments. Korea Development Bank and Shinhan Asset Management plan to receive the Phase 1 project proposal by the 29th of this month and select about 11 entrusted operating companies around May. Entrusted operating companies are responsible for identifying investment targets and managing the funds; their selection will influence the industries and companies that receive funding.

The background for this integration and expansion of policy funds is the increasingly fierce competition in cutting-edge industries. Strategic industries such as semiconductors, artificial intelligence, and secondary batteries often require large initial investments and have long payback periods, making it difficult for private funds alone to meet demand. The government and policy financial institutions plan to fill investment gaps in these fields through these funds and direct capital to areas that have not yet received sufficient market attention, thereby revitalizing the entire industrial ecosystem. Korea Development Bank also stated that it will build a large-scale support system for cutting-edge strategic industries and cover areas with relatively insufficient investment to enhance the global competitiveness and innovation ecosystem of domestic cutting-edge industries.

Market attention is focused on whether this fund can go beyond mere capital supply and become a means of implementing industrial policy. If the large policy fund is formed as planned and drives private funds to flow in together, it could open up opportunities for companies with high growth potential but facing financing difficulties. This trend may lead to expanded investments centered on cutting-edge strategic industries and a restructuring of policy finance in the future.