Seoul, Aug 25 (IANS) South Korea’s ruling Democratic Party (DP) and the government on Tuesday stressed the need for the active role of fiscal policy and investment in future industries, as the government eyes a record-high budget for next year.
“Above all, we should focus our fiscal capacity on securing leadership in future industries,” DP floor leader Han Byung-do said during a consultative meeting between party and government officials on next year’s budget proposal.
He urged the government to set priorities on where and how to allocate the budget, emphasising the need to strategically invest in areas supporting the youth, region-led growth and future industries.
President Lee Jae Myung earlier announced that the government will draw up a record-high budget of around 800 trillion won (US$540 billion) for next year and use the additional tax revenue expected from the ongoing semiconductor boom to create the “future response fund” to invest in future industries, policies for young generations and regional development.
Echoing Han’s call to boost future industries, Rep. Kwon Chil-seung, the DP’s chief policymaker, called for strategic investments in artificial intelligence (AI) to help South Korea become one of the world’s top three AI powerhouses, reports Yonhap news agency.
“The 2027 budget proposal should play an active fiscal role, not only in supporting the country’s growth but also its transformation,” Kwon said, noting that investment should also be made in key sectors, such as bio, culture, defence and energy.
On the government’s fiscal strategy, Budget Minister Park Hong-geun said the government will focus on supporting the country’s economic growth through active fiscal management to create an “irreplaceable South Korea.”
Park said the government will use the so-called “future response fund” to put increased tax revenue from the semiconductor boom toward strategic investment rather than short-term spending.
The DP and the government outlined five key areas of investment in next year’s budget proposal, including advancing the AI sector and the “three megaprojects” initiative, Kwon told reporters after the meeting.
The ruling party and the government also vowed efforts to boost future growth engines, such as aerospace, expand support for the youth, address polarisation and improve public safety.
As part of the efforts, the government plans to increase funding for aerospace research and development with the goal of achieving a lunar landing by 2030, while securing 10,000 graphics processing units to develop frontier-level AI models.
Also included in the budget proposal are record-high subsidies for electric vehicles and support for developing nuclear-powered submarines, as well as full tuition support for students at regional national universities.
The three megaprojects initiative, unveiled in late June, calls for large-scale investments in semiconductors, physical AI and AI data centres in regional areas.
–IANS
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