South Korea to Launch Fund for Future Growth Using Chip Tax Gains

South Korea will launch a new fund dedicated to securing future growth engines, using recent sharp gains in tax revenue from the country's booming chip industry, officials announced. The initiative, revealed during a senior-level meeting between the government and the ruling party, aims to channel additional tax revenue into strategic investments rather than letting it sit idle.

Presidential Chief of Staff Kang Hoon-sik said the fund would make "bold investments for the future," including support for the "three megaprojects," creating new growth engines, addressing K-shaped polarization, and supporting housing, startups, and jobs for those in their 20s and 30s.

The three megaprojects initiative, unveiled by the government last week, calls for large-scale investments in semiconductors, physical artificial intelligence (AI), and AI data centers. Prime Minister Han Seong-sook echoed the view, comparing the potential impact to the expressways and high-speed networks of the past.

Budget and Regulatory Plans

The Ministry of Planning and Budget said it will seek to revise relevant laws to pave the way for the fund's launch. An official explained that the government uses the term "additional tax revenue" rather than "excess," which refers to gains exceeding the forecast for a single fiscal year.

The Financial Services Commission (FSC) also unveiled plans to expand the National Growth Fund, a mega-sized investment fund aimed at nurturing key industries, to 200 trillion won (US$134.1 billion) over the next five years. The fund, launched late last year, targets strategic high-tech industries including AI, semiconductors, and renewable energy. The expansion adds 50 trillion won to the initial plan and broadens beneficiaries to include new strategic industries such as aerospace.

Additionally, the FSC plans to establish an 880 billion-won technology investment fund with a maturity of more than 10 years to support long-term research and development. A 600 billion-won investment fund will be offered to the public in September, featuring tax breaks and loss protection, following an initial offering in May.

Political Support

The ruling Democratic Party expressed support for the initiative. Rep. Han Byung-do, the party's acting head and floor leader, said the party and government need to focus all efforts on the endeavor. The presidential chief of staff emphasized that the fund will serve as a cornerstone for making South Korea an irreplaceable player, while the three megaprojects will determine the country's future over the next 20 to 30 years.