Menu Close

Gov't to expand Korean New Deal investments to W220 tril.

This post was originally published on this site
President Moon Jae-in speaks during an event to announce the Korean New Deal 2.0 initiative at Cheong Wa Dae, Wednesday. Yonhap

New initiative to keep focus on digital, green projects

By Lee Kyung-min

The government said Wednesday that it will increase its investments in Korean New Deal projects to 220 trillion won ($191 billion) by 2025, up from its earlier plan of 160 trillion won, in a bid to secure new growth engines and better prepare for the post-pandemic period.

The plan was unveiled as President Moon Jae-in announced the Korean New Deal 2.0 initiative during a meeting with top economic policy advisers at Cheong Wa Dae, Tuesday. It is said to be an improved version of the Korean New Deal put in place last July.

The new initiative will focus on fostering digital and green projects, while expanding state-run childcare programs and helping young, low-income earners to acquire assets.

“The enhanced initiative will prioritize digital, green, strengthening the social safety net and balanced growth,” President Moon Jae-in said in a meeting with top economic policy advisers at Cheong Wa Dae.

“The Korean New Deal will continue evolving to meet the needs of the times. We can use a crisis as an opportunity to change the structure and foundation that causes the danger. The drive will transform the country to turn the crisis into an opportunity for the future.”

Senior officials of the finance, welfare, ICT, education, trade, employment and environment ministries attend a press briefing at the Seoul Government Complex, Tuesday. Yonhap

A total of 49 trillion won will be invested by 2025 to advance digital projects, notably concerning so-called “Metaverse” technology. A combination of “meta” and “universe,” the term refers to a collective, virtual, shared space where traditional physical space restrictions disappear due to a mixture of virtual and real components.

The government will promote the transition in the public sector to adopt privately run cloud systems, as well as blockchain-based operating systems. This will help better prepare for the digital era whereby the importance of core technologies will become more pronounced.

Also to be promoted is the expansion of MyData, the name for tailored financial services to be introduced via closer integration of service providers and information sharing.

The services are available in the financial and medical sectors but will be expanded to include all sectors, backed by easier and safer utilization of identity theft protection programs, upon a revision to a related law that governs personal information protection.

For the Green New Deal, the government plans to spend some 61 trillion won to bolster green industries and eco-friendly projects. The Green New Deal will focus on carbon neutrality which is emerging as the “global new normal” and defined as a sustainable future growth engine. The government aims to go carbon neutral by 2050.

The goal of nationally determined contributions (NDCs), as specified by the Paris Agreement, will be managed by 2030, propped up by an overhaul of the greenhouse gas measurement and evaluation system to better respond to calls for a green, sustainable future.

Also, the government plans to invest around 50 trillion won to strengthen jobs and social safety nets and nurture talented workers in key sectors, including non-memory chips and next-generation vehicles.

In particular, the government will initiate a program for young, low-income workers to receive a lump sum after working for up to three years.

Those who earn less than 22 million won in annual income and less than 100 percent of the median income will receive 100,000 won from the government, if they put the amount in a designated savings account every month. If they earn less than 50 percent of the median income, the government will give three times the amount they save every month. This means the young workers will be able to make between 7.2 million won and 14.4 million in three years.

Housing programs for young, low-income earners will be strengthened. Low-interest jeonse loans to young workers at small- and medium-sized enterprises (SMEs) will be extended for two years to 2023.

Unique to Korea, jeonse is a housing rental system whereby tenants pay a lump sum refundable deposit instead of monthly rent.

The government will give up to 100 million won in loans at an annual rate of 1.2 percent for housing that requires deposits less than 200 million won.

Also to be strengthened is the social safety net for low-income earners. Single parents that earn less than 30 percent of the median income will be given up to 1.2 million won a year for childcare costs. Those who earn less than 548,349 won a month will be eligible.

If the parent is aged between 25 and 34, they will be given between 600,000 won and 1.2 million won in addition to the basic 1.2 million won.