Boosting the Economy by Investing Pension Funds in Public Projects

The government and the ruling Uri Party will implement a “Korean-version of New Deal policies” starting the second half of next year, which are designed to boost the economy by investing pension funds in various public projects.

Controversies, however, are expected during the budget deliberation at the National Assembly since the opposition Grand National Party (GNP) opposed the policies, saying they would only exacerbate fiscal deficit in the long run.

Deputy Prime Minister and Finance and Economy Minister Lee Hun-jae reported a comprehensive investment plan at the economy workshop attended by high-ranking officials from the Uri Party, the government, and Cheong Wa Dae, which was held on Sunday at the Central Officials Training Institute in Gwancheon, Gyeonggi Province.

The government will enforce the comprehensive investment plan that makes the most of resources, like pension and private funds, from the second half of next year. It will also push forward selling off the Korea Highway Corporation’s authority to collect highway tolls to the National Pension Corporation.

The government has decided to spend national pension funds on senior centers, public health and medical facilities, and private funds on building college dormitories, and school swimming pools.

Public pensions will be invested in training centers for civil servants and local government buildings, and national housing funds will be used for establishing public housing and cultural facilities.

The government will increase the volume of investment of major corporations, such as Korea Electric Power Corporation, Korea Highway Corporation and Korea National Housing Corporation, by 1.5 trillion won.

As part of the policies, the Ministry of Commerce, Industry and Energy (MOCIE) will proceed with projects of 7.186 trillion won in new investments by public corporations, and technology development of small and medium sized businesses.

The Ministry of Education and Human Resources Development said that it would consider raising one trillion won annually from pension funds, banks, and private investors in order to introduce a long-term student loan system for college students from low-income families.

“The government policies are to blame for the current economic difficulties, so it is wrong to make up the policy failures with public and private capital,” argued Lee Han-gu, GNP Policy Committee chairman.