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  • 작성자 사진Lee Yun-zee

[Feature: 4th Industrial Revolution] Policy New Deal Fund to Lead Korea

최종 수정일: 2021년 4월 19일

No. 150 / Mar 8, 2021


The Korean government announced the Korean New Deal to boost the economy and create jobs, since the economy has been sluggish since the COVID-19 pandemic began. This is a five-year state project that will focus on strengthening the Digital New Deal, Green New Deal, and safety net. The Korean government said that it will not only create jobs but also prepare for innovative growth in the post COVID-19 era. The Digital New Deal aims to spread digital innovation and dynamism in the overall economy based on information and communication technologies. The Green New Deal aims to achieve carbon neutrality by switching to a green economy, such as by using eco-carbon and low-carbon technologies. The main methods of strengthening safety nets are strengthening employment and social safety nets, training human resources according to changes in the economic structure, supporting employment, and closing digital gaps.


To successfully implement the Korean version of the New Deal policy, the government created New Deal funds to effectively utilize liquidity in the market. The funds are classified as the policy-driven New Deal Fund, New Deal Infrastructure Fund, and Private Deal Fund, which means 100 trillion won in policy-driven finance and 70 trillion won in private finance over the next five years to shift market liquidity from unproductive to productive. Policy-driven New Deal funds invest in New Deal-related companies and projects. The plan is to combine 7 trillion won from the parent fund with 13 trillion won from an equity fund by 2025. A parent fund is a policy-making financial institution such as the government or the Industrial Bank, and an equity fund is a private fund such as the general public or banks. The parent fund bears the risk of investment first, and bears the loss first, so it is guaranteed afterwards. The government allowed long-term investment to encourage private capital to actively participate in the policy-driven New Deal fund. In addition, it will provide incentives for private investors to choose from when allocating profits and losses to funds, and strengthen incentives as the percentage of investment performance in the New Deal sector increases. In addition, fund management companies will be given preferential treatment by proposing investment in the New Deal field, which has a high risk of investment and a high burden for private funds to actively participate. President Moon Jae-in joined the fund online on January 15, 2021, and invested a total of 50 million won. It is estimated that he earned 2,729 million won revenue a month after the investment. If the Korean New Deal begins in earnest, the return on funds is expected to show a stronger trend.


While the government is expected to actively invest, experts have discussed the risk of investors losing money. Professor Kim So-young from the Department of Economics, Seoul National University, said, “Some of the 197 items are already saturated, and we do not know what will happen to our investment profits individually, so there is a high risk.” “Since the Korean New Deal is a mid- to long-term business, there are concerns that it does not meet the expected profit period of domestic investors.”

 

By Lee Yun-zee, AG Reporter

lyz5511@ajou.ac.kr

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