The South Korean government will introduce legislation late this month to establish a “South Korean-style strategic sovereign wealth fund” backed by approximately ₩20 trillion (approximately $14.2 billion) in resources. The plan calls for the bill to pass the National Assembly within the year, with full-scale investment in national strategic industries such as semiconductors, artificial intelligence (AI), and nuclear power beginning next year. Investment execution planned for next year is expected to reach at least ₩600 billion (approximately $424.9 million) to over ₩1 trillion (approximately $708.2 million).
According to relevant ministries on the 19th, South Korea’s Ministry of Economy and Finance is pursuing a plan to introduce an amendment to the Korea Investment Corporation Act late this month to establish the strategic sovereign wealth fund. The bill will include specific operational methods, investment targets, and the investment decision-making framework for the fund.
Rather than creating a separate new fund, the sovereign wealth fund will operate through a newly established “strategic investment account” at Korea Investment Corporation (KIC), separate from the existing foreign exchange reserves entrusted account. The concept is to leverage KIC’s two decades of global investment experience and overseas networks while keeping existing foreign currency asset management and strategic industry investments strictly separated.
The initial launch size is expected to be approximately ₩20 trillion (approximately $14.2 billion) plus additional cash contributions. The government plans to contribute in-kind approximately ₩16 trillion (approximately $11.3 billion) in government-held public institution shares—including those in Korea Development Bank, Export-Import Bank of Korea, and Industrial Bank of Korea—along with approximately ₩4 trillion (approximately $2.8 billion) in shares received in lieu of inheritance and gift taxes, to establish roughly ₩20 trillion in initial capital.
Additional cash contributions may be added on top of this. The specific amount has not yet been finalized. Currently, contributing cash from the Future Response Fund is being considered as the leading option, though the possibility of contributing from next year’s general account budget remains open.
If the sovereign wealth fund launches as planned, actual investments will begin next year. A Ministry of Economy and Finance official said, “Next year’s investment scale is expected to be at least ₩600 billion (approximately $424.9 million) to over ₩1 trillion (approximately $708.2 million),” adding that “the exact initial launch size of the South Korean-style sovereign wealth fund will be included when next year’s budget proposal is announced.”
The government plans to secure approximately ₩600 billion in annual investment resources starting next year by utilizing roughly ₩500 billion (approximately $354.1 million) in dividends generated from public institution shares and approximately ₩100 billion (approximately $70.8 million) from the sale of shares received in lieu of taxes. If additional resources are secured, next year’s investment scale could expand to over ₩1 trillion.
Investment targets are expected to focus on national strategic industries. Semiconductors and AI, along with materials, components, and equipment, nuclear power, space and aerospace, and quantum technologies are the primary investment targets. Overseas supply chain companies from an economic security perspective, core infrastructure such as data centers and energy clusters, and the financial sector are also included in the candidate pool.
The operational approach will also be differentiated from existing policy finance. The fund will supply “ultra-long-term patient capital” by making direct equity investments at various stages of corporate growth without setting separate maturity or liquidation timelines. Rather than simply lending money to companies or providing guarantees, the fund will exercise voting rights attached to equity stakes as a strategic investor (SI). The concept allows for providing input on corporate management when necessary.
Operating returns will be used for reinvestment, government dividends, and recoupment to the national treasury. The long-term goal is to grow the sovereign wealth fund’s own investment returns to reduce fiscal burden and create resources for future generations.
The fund plans to co-invest with domestic policy funds such as the National Growth Fund and Fund of Funds, and to partner with overseas sovereign wealth funds and global asset managers. The intention is not to rely solely on government resources but to attract private and foreign capital together to expand the overall investment scale.