South Korea’s presidential policy chief said the country’s US$350 billion (RM1.48 trillion) investment pledge as part of the US trade deal is largely structured as loan guarantees rather than direct capital injections, seeking to ease domestic concerns over the scale and risks of the agreement.
In a televised interview on Sunday, senior presidential policy director Kim Yong-beom said Seoul’s actual equity commitment would remain below 5%, emphasising the initiative is designed to support commercially viable, pre-vetted US-based projects and not intended to provide unconditional financial support.
“The most accurate way to understand the US$350 billion is as a credit guarantee ceiling,” Kim said, referring to the role of state-backed Export-Import Bank of Korea and the Korea Trade Insurance Corp in supporting South Korean companies involved in US projects. “This isn’t about financing everything unconditionally, but about investing in projects that are commercially viable.”
Last week, President Lee Jae Myung’s administration reached a trade deal with the US and agreed to establish the fund to cap the across-the-board tariffs on South Korean exports to the US at 15%. The last-minute deal helped South Korea avert a worst-case scenario of a 25% import levy, that could have severely impacted the export-dependent economy, where overseas shipments account for over 40% of gross domestic product.
Kim said that South Korea’s fund structure closely mirrors Japan’s US$550 billion pledge, which similarly leans heavily on guarantees. Japanese officials have said only 1% to 2% of that amount would be deployed as actual investment, an approach South Korea is expected to follow.
Of South Korea’s total commitment, US$150 billion is allocated to a shipbuilding initiative known as MASGA — Make American Shipbuilding Great Again — in which South Korea is expected to take the lead. The remaining US$200 billion will target US-based projects in semiconductors, batteries, and nuclear energy, industries identified by Washington as strategic priorities.
Still, Kim emphasised that the South Korean government won’t blindly approve financing for every project the US proposes.
“We have made clear that only projects that are commercially reasonable and viable will receive backing,” he said, noting that this principle had been formally recorded in internal agreements.
Kim said profits from the fund would likely be reinvested in the US, rather than immediately repatriated, a structure South Korea finds acceptable. “This could ultimately benefit South Korean companies participating in those projects,” he said.
“If profits are generated, it means the project was successful — and that opens the door for second and third rounds of investment,” he said.
Separately, Kim dismissed speculation that South Korea had agreed to open its rice or beef markets as part of the broader deal. While technical adjustments in quarantine procedures may be discussed, there is no cost to be borne by the public in this regard, he added.
Kim pointed to the broader challenge of shifting global trade norms, particularly as countries like the US sharpen their focus on trade imbalances and industrial policy.
“This is not just about responding to external pressure,” he said. “It’s time we start a domestic dialogue about how to address these issues on our own terms.”
Source: theedgemalaysia