South Korea to embed AI in foreign aid with new 'K-AI Package'

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol [Ministry of Economy and Finance]

South Korea will introduce a new development cooperation model that embeds artificial intelligence into its Official Development Assistance programs. Going beyond supplying developing countries with roads, hospitals and water infrastructure, the government plans to support their digital transformation through a "K-AI Package" that bundles AI solutions, data centers and power infrastructure — while also expanding a base for domestic AI companies to enter overseas markets.

The government will simultaneously pursue management of trade risks stemming from the United States, reform of the World Trade Organization, responses to new trade norms and expanded free trade with Bangladesh.

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol convened the 271st Meeting of Ministers on External Economic Affairs at Government Complex Sejong on Monday and finalized the strategy, titled "K-AI Package Promotion Strategy Centered on Loan-Based Official Development Assistance."

The government plans to build a new development cooperation model by combining AI solutions, AI data centers and renewable energy generation facilities with infrastructure projects financed through the Economic Development Cooperation Fund (EDCF), aiming to support the overseas expansion of South Korea's AI industry while enhancing the effectiveness of development cooperation.

The K-AI Package upgrades existing ODA projects with AI capabilities at its core. The government plans to develop Korean-style AI signature business models across seven sectors — water resources, health, energy, transportation, agriculture, culture and education — propose them to recipient countries, and let each country choose the projects it needs. Domestic AI technology and components will be used to the greatest extent possible to support Korean companies' overseas market entry and export expansion.

The package bundles AI solutions, AI data centers and power infrastructure into a single support framework. Customized AI solutions will be integrated into EDCF infrastructure projects such as water supply systems, hospitals and power plants, with AI data centers built to operate them. Power supply facilities — including renewable energy generation and energy storage systems (ESS) — will also be provided based on each country's power conditions. The government will also explore allowing developing countries to access large domestic AI data centers through a voucher system, or jointly building regional AI data centers.

From the project identification stage, the government will link the Export-Import Bank of Korea's EDCF field offices, the Knowledge Sharing Program and multilateral development bank trust funds to identify demand for AI projects, and build a composite support framework combining co-financing and development finance instruments. The government also plans to establish a global AI hub in South Korea to serve as a cooperation base among international organizations, multilateral development banks and private companies, and to expand AI education and training for civil servants and youth from developing countries to help spread Korean technology and solutions abroad.

Starting in the second half of this year, the government will identify project demand from recipient countries, propose the K-AI Package and pursue commercialization, while also providing domestic companies with information on overseas AI projects and actively supporting their participation.

The meeting also addressed follow-up responses to US Section 301 investigations and tariff and non-tariff measures.

The government will maintain close consultations with Washington on US trade measures being pursued on grounds including overproduction and forced labor, and manage the bilateral trade relationship in a stable manner. It will also closely review the commercial viability of investment projects in the United States under the recently enacted Korea-US Strategic Investment Special Act and the Korea-US Strategic Investment Corporation framework, and advance follow-up procedures accordingly.

The government will take a proactive role on major trade issues including WTO reform, the early entry into force of the Investment Facilitation for Development Agreement and the maintenance of duty-free treatment for electronic transmissions. It also plans to actively participate in discussions on new trade norms such as the Green Economy Partnership Agreement, in response to major countries' climate measures emerging as new protectionist barriers, with the aim of strengthening South Korea's green industries and getting ahead of shifts in the new trade order.

The government is also pushing to conclude a Comprehensive Economic Partnership Agreement (CEPA) with Bangladesh, the world's eighth most populous country. It expects the CEPA to develop Bangladesh — which it sees as a strategic gateway to the South Asian market — into a broader economic partner, expanding cooperation beyond textiles and apparel into infrastructure, manufacturing, digital and energy sectors to elevate bilateral economic ties.

"In an environment of growing external uncertainty, we must actively leverage the economic cooperation foundations built through summit diplomacy and ensure the implementation of economic MOUs proceeds without a hitch," Koo said. "We will stably manage external risks while continuously expanding new markets and cooperation bases to broaden global business opportunities for our companies."

fact0514@heraldcorp.com