Busan forum on advanced industries, venture ecosystem

'Lower rates, higher limits' pledged for regional firms

Up to 3 regional-only league managers to be selected this month

Financial Services Commission Chairman Lee Eok-won delivers opening remarks at a National Growth Fund manager forum held at the Korea Financial Investment Association in Yeouido, Seoul, on June 12. [Herald DB]
Financial Services Commission Chairman Lee Eok-won delivers opening remarks at a National Growth Fund manager forum held at the Korea Financial Investment Association in Yeouido, Seoul, on June 12. [Herald DB]

The National Growth Fund approved 6.5 trillion won ($4.18 billion) in financing for regions outside the greater Seoul area over the past six months, accounting for 46.8 percent of the fund's total capital deployed. The government said it plans to continue channeling the fund aggressively into regional industrial sites to lead a structural economic transformation centered on local economies.

Financial Services Commission Chairman Lee Eok-won made the announcement Thursday at a forum on advanced industries and the venture ecosystem held at Busan's Eurasia Platform, pledging to "mobilize every resource so that regional businesses can access funding at lower interest rates and higher limits."

The forum was organized to hear firsthand accounts of challenges facing advanced-industry firms in Busan and the broader southeastern region, and to explore ways to improve policy financing support, including through the National Growth Fund. Busan Mayor Jeon Jae-soo, who took office Tuesday, also attended to discuss coordinated support measures at the local government level.

Lee said demand for more capital remains strong at regional industrial sites, diagnosing the problem as structural. "Capital does not naturally flow to the regions on its own, because of the thick barriers of information asymmetry and the concentration of production facilities in the greater Seoul area," he said.

In response, the FSC will establish a regional-only league within the National Growth Fund — on top of the existing target of allocating 40 percent of the fund to regional investment — committing 200 billion won a year for five years, or 1 trillion won in total, exclusively to companies based outside the capital region. The commission plans to select about three fund managers this month and begin raising capital in the second half of the year. At least 60 percent of each fund's committed capital will be required to go to regionally based companies, with the league expected to serve as seed money for building a local venture ecosystem.

For the public-participation tranche of the National Growth Fund to be recruited in the third quarter, the FSC also put in place an incentive structure that grants additional performance fees to managers who invest 40 percent or more of their capital outside the greater Seoul area.

The FSC also plans to strengthen regional financial support tied to the government's "five poles, three special zones" strategy and to build a sustainable public-private cooperation framework, including by expanding startup incubation platforms to foster regional entrepreneurship and community finance ecosystems.

Lee highlighted the potential of Busan and the southeastern region, noting their "superior port infrastructure and MRO (maintenance, repair and operations) clusters as assets for advanced-industry development." He said those strengths must be paired with "new assets — the cultivation of leading advanced-industry companies and the revitalization of the venture ecosystem."

Lee acknowledged that none of the 21 projects approved under the National Growth Fund so far involve Busan-based companies, but promised to change that. "Given that Busan is a hub for future mobility and the defense industry, I will ensure that approval cases for Busan are created through future mobility and defense support projects included in the upcoming second round of mega-projects," he said.


ehkim@heraldcorp.com