Korea to create $17 bil. fund to boost New Deal projects
President Moon Jae-in delivers his speech at the start of his meeting with chief executives of the country's leading financial institutions for thorough discussions of the Korean version of New Deal initiative at Cheong Wa Dae, Thursday. Yonhap
By Kim Yoo-chul, Do Je-hae
In line with President Moon Jae-in's expansion of his Green New Deal projects, the finance ministry plans to build up a 20 trillion won ($17 billion) fund over the next five years.
“With the aim of attracting more retail investors to the Korean version of the New Deal and supporting investment from the private sector, we will set up the Korean New Deal fund,” Finance Minister Hong Nam-ki said during a press conference at the Government Complex in Seoul, Thursday.
The fund will be comprised of an initial 3 trillion won investment from the government followed by 4 trillion won from state-run financial institutions and 13 trillion won from private financial companies and the public, according to the ministry.
Hong reported details of this to President Moon during a meeting with chief executives of the country's leading financial groups at Cheong Wa Dae, earlier in the day.
The finance minister said that the fund will help absorb excess liquidity in the stock market as the ministry will modify the specifics of various tax benefits for those investing in the fund following discussions with leading brokerages and banks.
On a related note, the Korea Exchange, the country's main bourse operator, announced it will develop a K-New Deal Index under which it plans to launch the KRX BBIG (battery, bio, internet, games) and carbon Green New Deal EFTs in October and December this year, respectively.
The Digital New Deal, part of the President's New Deal stimulus package, involves plans for “surging demand for remote services” amid the spread of the COVID-19 pandemic. Investments will be made in technologies that enable contactless services such as robots, drones and high-speed internet.
“The BBIG K-New Deal Index will have 10 companies each from the secondary battery, bio, internet and games sectors. The launch of the index will provide opportunities to investors to generate profits via index-oriented products such as ETFs,” the KRX said in a statement.
The bourse operator said that it also plans to develop a Carbon Green New Deal Index that is intended to persuade companies to speed up their efforts to cut carbon emissions.
President Moon told participants in the morning meeting that the Korean version of the New Deal will help the local economy become a greener one. He also pledged to ease regulations and policy hurdles in order to speed up the execution and implementation of the initiative.
“Over the next five years, 100 trillion won will be invested in the Korean version of the New Deal through policy financing, and 70 trillion won via private financing,” Moon told the participants at the start of the meeting, according to Cheong Wa Dae press pool reports.
“Finance has played an important role when Korea was facing difficulties. The success of the Korean version of the New Deal will only come with the support of the private sector and investors' active participation,” Moon said.
Major banks have vowed to back the Korean New Deal drive. Woori Bank said it will provide 10 trillion won ― 2.15 trillion won in investment and 7.85 trillion won in financing ― for the project over the next five years.