AI, new growth engines, youth welfare, regions to receive big boost
Summary
The government plans to direct next year’s budget toward AI, future industries, youth support and regional development using higher tax revenue from the semiconductor boom on Tuesday. The budget is expected to rise by more than 10 percent from this year’s 729.9 trillion won and top 800 trillion won for the first time. Democratic Party of Korea and government officials said they agreed to an active fiscal role and to cut nonessential spending. The plan also includes five priority pillars, including national security.
Key Facts
- Next year’s budget is expected to rise by more than 10 percent from this year’s 729.9 trillion won and exceed 800 trillion won for the first time.
- Rep. Kwon Chil-seung said the Democratic Party of Korea and the government agreed on an active fiscal role to drive Korea’s structural transformation.
- Rep. Jung Tae-ho said the government outlined five priority pillars for next year’s budget during high-level consultations.
- The plan includes a special semiconductor account and state capital injections into Korea Electric Power Corp. and Korea Water Resources Corp. to support AI data center infrastructure.
- The youth package includes credit-bearing university internship semesters and a youth development fund that would provide up to 1.2 million won per child annually through age 18.
Budget Minister Park Hong-geun, second from left, speaks during high-level budget consultations between the government and the ruling Democratic Party of Korea (DPK) at the National Assembly in Seoul, Tuesday. From left are Rep. Lee Kwang-jae, who chairs the National Assembly's Special Committee on Budget and Accounts; Park; DPK floor leader Rep. Han Byung-do; and DPK policy chief Rep. Kwon Chil-seung. Yonhap
The government plans to channel fiscal resources into artificial intelligence (AI), future industries, youth support and regional development by leveraging increased tax revenue from the semiconductor boom, government and ruling party officials said Tuesday.
The plan comes as next year’s budget is expected to increase by more than 10 percent from this year’s 729.9 trillion won ($527 billion), surpassing 800 trillion won for the first time. Rather than spending the additional revenue on temporary programs, the government and the ruling party intend to reinvest it in future growth.
“The Democratic Party of Korea (DPK) and the government have agreed on an active fiscal role to drive Korea’s structural transformation,” Rep. Kwon Chil-seung, the DPK’s policy chief, said following high-level budget consultations between the two sides. “We will boldly streamline nonessential expenditures to concentrate resources on strategic, high-growth areas.”
According to Rep. Jung Tae-ho, the DPK’s representative on the National Assembly's Special Committee on Budget and Accounts, the government outlined five priority pillars for next year’s budget, including full-scale support for three megaprojects aimed at positioning Korea as a leader in the AI era.
To support the three projects, which focus on semiconductors, physical AI and AI data centers, the government plans to establish a special semiconductor account and inject state capital into Korea Electric Power Corp. and Korea Water Resources Corp. to strengthen infrastructure needed to support AI data centers.
The second pillar focuses on frontier technologies, with the government planning to channel funding into 10 strategic technologies, including lunar exploration and autonomous-driving test zones, while providing record-high subsidies for electric vehicle purchases.
The third pillar centers on youth and education. The government plans to introduce credit-bearing university internship semesters and establish a youth development fund that would provide up to 1.2 million won per child annually through age 18.
The fourth pillar is regional development, with plans to introduce a special growth engine subsidy to support facility investments by key companies relocating outside the Seoul metropolitan area. The government will also fully cover tuition at regional national universities and establish a dedicated regional healthcare account.
The government plans to allocate funds for the fifth pillar — national security — by providing for research into nuclear-powered submarines, raising salaries for junior military officers and establishing a resource security fund to strengthen the resilience of critical supply chains.
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