The Korean New Deal Fund

Yugyeong Jeong

Before explaining the Korean New Deal Fund, the New Deal is an economic revival policy that the United States pursued to overcome the recession caused by the Great Depression. In the United States, production increased after World War I, but because consumption did not follow, inventory was piled up. With the massive crash of the New York Stock Market in October 1929, the economic recession expanded throughout the United States and around the world. Prices continued to plummet, and most companies and banks were shut down. In the midst of the panic, Roosevelt was elected president in 1932. He promised a ‘new policy for the forgotten (New Deal)’ with the aim of rebuilding the economic society and relieving the people of poverty anxiety. The New Deal policy, implemented from 1933 to 1936, affected many areas of economy, society, and politics, and played a role in expanding the national economic function.

Recently, the Korean New Deal Fund for economic recovery has become an issue in the post-corona phenomenon. In July 2020, the government announced a comprehensive New Deal plan to respond to the socio-economic changes and overcome the crisis after the COVID-19. The Korean New Deal Fund is a public participation policy fund in which the government, financial institutions, and the private sector jointly invest in companies related to the New Deal policy. It aims to invest in Digital New Deal, Green New Deal and Stronger Safety Net over the next five years by 2025. The Digital New Deal is to build and utilize data, spread 5G and AI, foster Untact industries, and digitize SOC. The Green New Deal promotes the use of low-carbon, decentralized forms of energy to make a green industry innovation in the ecosystem. In the Safety Net section, the government provides stronger employment and social safety net, and aims for a fair economy.

The Korean New Deal Fund consists of three categories. First, the Policy-type New Deal Fund invests in related companies and projects. With a total scale of 20 trillion won, 7 trillion won of funds raised by the government and financial institutions and 13 trillion won of private funds are combined. Second, the New Deal Infrastructure Fund is to invest directly in infrastructure facilities such as wind power, solar energy, renewable energy power generation complexes, hydrogen charging stations, etc. Third, the Private New Deal Fund is a voluntary investment destination by a private financial company. BBIG in the ‘TIGER KRX BBIG K-New Deal’ ETF, one of the Private New Deal Funds, stands for Battery, Bio, Internet, and Game. These are the investment targets that are expected to benefit from the Korean New Deal. Since the issue is who will take the initiative in the Fourth Industrial Revolution, it is time to support the Korean companies to develop.