South Korea to launch a $13.9 billion sovereign wealth fund for strategic industries

South Korea's government said on Friday 31 July 2026 that it will launch a new 20 trillion won ($13.9 billion) sovereign wealth fund next year to make long-term investments in strategic domestic industries including artificial intelligence, chips, robotics, defence and biotechnology. The plan was announced at a meeting of economic affairs ministers chaired by Minister of Finance and Economy Koo Yun-cheol, and the fund will be established within the Korea Investment Corporation (KIC).

The fund will be capitalised from two sources: about 16 trillion won in shares the government holds in state-run financial institutions, including the Korea Development Bank, the Export-Import Bank of Korea and the Industrial Bank of Korea, and roughly 4 trillion won in shares received in lieu of inheritance and gift taxes. Additional funding may come from surplus tax revenue generated by the semiconductor industry and from private donations.

Unlike existing policy funds, the new vehicle will operate as "ultralong-term patient" capital, with no predetermined maturity or liquidation date. It will make direct equity investments, exercise the voting rights attached to its holdings and take an active role in corporate governance. The government expects the fund to protect key national technologies and help shield domestic companies from hostile takeovers. Koo said governments around the world are increasingly using strategic sovereign wealth funds not only to build national wealth but also to strengthen economic security and pursue active industrial policies. The government cited comparable moves abroad, noting Indonesia launched Danantara in February 2025, while Taiwan and Canada announced plans in May and April respectively. A revision to the Korea Investment Corporation Act goes to parliament in August, and subject to approval by the end of the year the fund is expected to begin operations next year.