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The presidents of Korea’s top 10 financial holding companies, such as Shinhan and KB Finance, met for the first time. The place is the Blue House. It was the ‘first Korean version of the New Deal strategy meeting’ organized by President Moon Jae-in yesterday. The government announced a 190 billion won plan in the New Deal Fund on the same day. Over the next five years, it will invest 100 trillion won in policy financing, 70 trillion won in private financing, and 20 trillion won in public equity funds to invest in digital and green infrastructure such as data centers and renewable energy, and related companies. The goal is to lead the response to the Fourth Industrial Revolution and climate change, and attract excess floating funds to the productive side.
Regarding the share of private financing at KRW 70 billion, the government explained that it was “the content announced by each financial institution.” It means participating voluntarily. However, it is uncomfortable. The smell of “government finance” is strong. In the New Deal Fund, the level of investment has been determined. Specific details such as investment objectives have not been confirmed. Private financial companies that take over clients’ money are not going to reveal the size of their investments in the form of ‘blind investing’, they do not ask for investment. Still, it is difficult to understand that the amount of 70 billion won came out. The government also attracted the top 10 financial holding presidents to the Blue House. This is why we are suspicious of “twisted government finances.”
At one point, there was no capital guarantee from the New Deal Fund, leading to an illegal dispute over the use of passports. Instead, the government decided to accept the losses first. This is a measure to encourage private participation in the fund. However, government losses must eventually be covered by national taxes. It is the hidden shadow of the financing of government policies. In the past, funding for government policies has not been very successful. This was the case with the “green finance” of the Lee Myung-bak administration, which promoted green growth. The same goes for the unification fund derived from “creative finance” and the “unification jackpot” from the Park Geun-hye administration. Thanks to the semiconductor stock price, the fund of small managers (materials, parts, equipment) created by the Moon Jae-in government is making a profit, but there are many variables like Corona 19, making it difficult to know quickly.
The situation is full of funds that have nowhere to go. There is no need for the government to go out and try to raise investment funds on a large scale in areas where the possibility exists. A whopping 59 billion won was concentrated on underwriting the Kakao Games public offering. Rather, there is concern that a very large control fund could give a negative signal, “Aren’t you trying to forcibly grow a business that isn’t possible?” What is really urgent is regulatory innovation. Can we expect investments to turn into new industries such as the Digital Green New Deal in the face of ‘regulatory risk’ shutting down the Tada service, which was used by 1.7 million people?
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