The Financial Services Commission held the seventh consultative body meeting on policy finance support with related government ministries and policy financial institutions on July 4. The consultative body on policy finance support was launched at the end of 2022 to more effectively align the supply of policy finance support to national industrial strategies. At the third meeting held in June last year, authorities discussed the creation of the KRW300 billion fund to foster growth of the semiconductor ecosystem, and in December of the same year, authorities introduced plans to provide policy finance support worth KRW102 trillion-plus to the five key strategic industries. As such, major government decisions regarding the supply of policy finance support are being handled and discussed through consultative body meetings.
At today’s meeting, FSC Vice Chairman Kim Soyoung delivered opening remarks where he discussed the importance of promptly identifying demands for funding on the ground and effectively matching them with the supply of policy finance support. Vice Chairman Kim said that the launching of the semiconductor ecosystem fund in the size of KRW300 billion last year helped to facilitate an expansion of the support program this year to up to KRW1.1 trillion-plus with input from government’s fiscal expenditure. In this regard, the semiconductor ecosystem fund’s launch last year provides a good example where policy financial institutions and related ministries were able to preemptively and effectively respond to the demands on the field. Thus, Vice Chairman Kim urged authorities to continue to closely coordinate to effectively supply policy finance support to propel development of future growth sectors.
Supply of Policy Finance Support as of May 2024
Until the end of May 2024, policy financial institutions—Korea Development Bank, Industrial Bank of Korea, and Korea Credit Guarantee Fund—supplied a total of KRW54.5 trillion to the five key strategic sectors. This marks about 53.2 percent of the total annual supply plan (KRW102 trillion), which surpassed the initial time-adjusted target of 41.7 percent. In this regard, Vice Chairman Kim expressed appreciations for the active response and handling shown by policy financial institutions, while urging them to continue to maintain steady supply of policy finance support for these industries.
KRW3.5 Trillion Policy Finance Support for AI Development
At the meeting, authorities also discussed plans to provide KRW3.5 trillion worth of policy finance support to promote development of AI technology and ecosystem.
First, until the end of 2024, KDB will provide KRW3 trillion in low interest rate loans to AI related sectors. A preferential interest rate reduction of up to 1.2 percentage points will be offered to those engaged in AI modeling, AI cloud computing, and other key AI application sectors, such as AI robotics and automated driving technologies. This program will be made available by KDB in July.
Second, KDB will newly create a fund (tentatively called “AI Korea Fund”) in the size of KRW500 billion to support development of AI technology and ecosystem, with injection of its own funds worth KRW150 billion and private sector investments of KRW350 billion. In this regard, Vice Chairman Kim said that the availability of this investment support will help promising AI firms to expand their business operations or make transitions to move forward. The availability of expanded and prompt policy finance support is also expected to promote competition and provide a source of relief in the AI sector, Vice Chairman Kim said.
* Please refer to the attached PDF for details.