Formation of Funds for Korean-Style New Deal Project’s Financial Resources Under Consideration

The government is considering forming a fund investing in social overhead capital (SOC) to raise financial resources for the composite investment plan (Korean style New Deal project), which is currently in progress to reinvigorate the economy.

Even if the inclusion of pension funds, which is currently a target of social repulsion, becomes difficult, they intend to secure financial resources through the private capital market.

On November 21, Park Byeong-won, assistant secretary of the Ministry of Finance and Economy (MFE), announced, “Since the initial arrangement of the composite investment plan, the plot was to open the door to not only the pension fund but also to general corporations, public enterprises and foreign corporations” and that “we cannot enforce the pension fund’s participation in the composite investment plan.”

He also added, “We are considering the method of private offering or public offering for gathering surplus capital in the market and investing in public enterprises with relatively high returns,” and that, “if appropriate returns are guaranteed, financial companies and investment companies will not have difficulty in creating a fund.”

The MFE and the Uri Party initially carried out the plan of investing the pension fund in the composite investment plan, but as considerable negative public opinion broke out and the competent minister of the National Pension Fund, the minister of the Ministry of Health and Welfare Kim Geun-tae, recently expressed strong objections to the investment of the National Pension Fund in the composite investment plan, the securing of the financial resources is emerging as an urgent issue.

Jong sik Kong kong@donga.com