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Yujin Kim and Seo Hye Seung ujeans@ajunews.com

South Korea Advances Development Finance Initiative with New Advisory Committee The South Korean government has established an advisory committee to promote its development finance initiative. Heo Chang, the Deputy Minister of Finance, chaired the first meeting of the Development Finance Advisory Committee on May 13 at the Government Seoul Complex. Earlier, Deputy Prime Minister and Minister of Finance Koo Yun-cheol announced at a recent meeting on external economic affairs that the government aims to advance Korean-style development finance to support the country's entry into new markets in the Global South. He stated, "We will introduce a new development finance model that mobilizes private finance to support the development of emerging economies through various financial instruments." The government has recognized the growing need for development finance. Major advanced countries are also shifting from budget-centered official development assistance (ODA) to development finance that utilizes private resources. Development finance is characterized by long financial support periods, a high risk tolerance, and a broad scope of assistance, which is expected to enhance South Korea's competitiveness in securing large-scale infrastructure projects in developing countries. Participants suggested that as global development cooperation trends evolve, the South Korean government should also activate its development finance capabilities. Kim Yong-bin, head of the Development Marketing Research Institute, shared examples of development finance institutions from major advanced countries, discussing their areas of support, key strategies, and methods of assistance. Deputy Minister Heo emphasized the need to establish a framework for Korean-style development finance that aligns with the country's conditions, stating, "We will continue to engage with private experts." The Ministry of Finance plans to hold a task force meeting to establish a comprehensive development finance framework based on the discussions from this meeting.* This article has been translated by AI. 2026-05-13 17:18:50
Government Enhances Effectiveness of National Contract Dispute Mediation System The government is taking steps to enhance the effectiveness of the National Contract Dispute Mediation System by listening to the voices of small and medium-sized enterprises facing disputes. On May 13, the Ministry of Finance and Economy held the "2026 First National Contract Dispute Mediation System Briefing Session" in collaboration with the Korea Federation of Small and Medium Businesses. The National Contract Dispute Mediation System allows procurement companies to request mediation from the National Contract Dispute Mediation Committee, which proposes solutions to resolve disputes. The committee is chaired by the Director of the National Treasury at the Ministry of Finance and Economy and consists of 15 members, including four government representatives and ten private sector members. Mediation cases surged from just one in 2014 to 60 last year, with projections indicating that this year will exceed 100 cases. Since the system's introduction, the acceptance rate for claims was 50.0%, and the mediation success rate was 35.7% last year. During the briefing, the Ministry provided explanations about the National Contract Dispute Mediation System and shared mediation case studies. It also discussed major types of disputes arising during the national contract process and potential solutions, focusing on real-life examples. Additionally, one-on-one customized pre-consultations were offered to companies currently experiencing disputes or anticipating them. The government is working to improve the utilization of the National Contract Dispute Mediation Committee by implementing various system enhancements. Starting June 11, the period for filing objections and mediation requests against contracting agencies will be extended from 20 days to 30 days. A proposed amendment to the National Contract Act aimed at increasing the effectiveness of the mediation system has also been submitted to the National Assembly. This amendment seeks to establish a financial system that allows the committee to issue binding decisions and enables companies to apply for mediation without prior objections. Furthermore, it will allow contracting agencies and the committee to review and recommend corrections to contract conditions and unfair clauses in advance. The proposal also includes increasing the number of mediation committee members from the current 15 to 30 and providing assistance from public defenders for small and medium enterprises. Lee Joo-hyun, Director of Procurement Contract Policy at the Ministry, stated, "We will strengthen the effectiveness and accessibility of the National Contract Dispute Mediation System so that it can become a trusted solution in the field." Yang Chan-hwa, Executive Director of the Korea Federation of Small and Medium Businesses, expressed support for the proposed amendment, hoping it will pass quickly to help safeguard the rights of small procurement companies.* This article has been translated by AI. 2026-05-13 17:18:20
Government Sells NXC Shares for 1 Trillion Won to Stabilize Currency and Bond Markets The South Korean government has sold part of its NXC shares, which it had held for three years, at a price higher than the book value to stabilize the currency and secure non-tax revenue. Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, announced this during a press conference at the Government Sejong Center on May 11. The shares were sold at 555,800 won each, exceeding the book value of 553,400 won per share, reducing the government's stake from 30.6% to 25.7%. Previously, the government attempted to sell the shares through public bidding and the selection of a sale manager after receiving them from NXC in 2023, but repeated failures occurred due to the large scale of 4.7 trillion won. NXC has initiated a stock buyback based on investment returns from domestic and international corporations. This sale marks the first instance of asset disposal exceeding 30 billion won since the government improved its asset sale system last December, completing the necessary procedures including meetings of the National Property Policy Review Committee, cabinet approval, and reporting to the National Assembly. Koo stated, "Although the government had tried to sell the shares until last year without success, this time, Nexon purchased the shares with foreign currency. We view this positively as the sale price exceeds the book value we received." The Ministry of Economy and Finance expects this sale to have several benefits, including an influx of foreign currency and securing non-tax revenue. By utilizing some of the foreign currency funds for the buyback, the government aims to contribute to currency stability. Additionally, the successful sale of previously stagnant shares is expected to contribute to fiscal management. The government plans to include the 1 trillion won from the NXC share sale in this year's non-tax revenue budget. Meanwhile, due to recent amendments to the Commercial Act mandating the retirement of treasury shares, NXC is expected to retire the shares it has purchased. Koo also mentioned that the government is working on legislation related to the 'Korean version of the sovereign wealth fund,' which would address the transfer of the NXC shares to the fund. Under current law, proceeds from the sale of Nexon shares cannot be transferred to the sovereign wealth fund. He added, "If a sovereign wealth fund is established, we could place the shares received into the fund, allowing it to determine the timing and method of sale to maximize profits. I believe that if the fund is established quickly, it could greatly benefit the nation." The government has assessed that the inclusion in the World Government Bond Index (WGBI) has positively impacted the foreign exchange market, leading to a significant influx of foreign capital, primarily from Japanese investors, into the domestic bond market. From March 30 to May 8, foreign investors purchased a total of 14.6 trillion won in government bonds based on transaction standards, with net purchases amounting to approximately 10 trillion won. The government analyzed that the WGBI inclusion is expanding the investor base in the medium to long term, improving the supply and demand conditions in the bond market. It also expects that the stability of the South Korean economy, policy reliability, and the level of financial market development will enhance the country's credibility internationally. In particular, the influx of new foreign capital is anticipated to lower government bond yields and reduce corporate financing costs, positively affecting the real economy and encouraging investment. The government also noted that the WGBI inclusion, along with the new framework for the National Pension Service and the introduction of domestic stock return accounts (RIA), is contributing to the stability of foreign exchange supply and demand. Following the announcement of the National Pension Service's new framework on April 14, expectations for expanded currency hedging have alleviated speculative dollar buying in the offshore market. Amid a favorable domestic capital market, the number of RIA accounts and the amount deposited are rapidly increasing. As of May 8, the number of RIA accounts reached 212,000, with deposits exceeding 1.6 trillion won. The government anticipates continued capital inflows, as investors can receive a 100% tax exemption on capital gains from the sale of overseas stocks until the end of this month. 2026-05-11 16:30:33
KDI: Rising International Oil Prices Could Increase Inflation by 1.6% Rising international oil prices, triggered by the conflict in the Middle East, could increase South Korea's consumer price inflation rate by as much as 1.6 percentage points this year, according to a report from a national research institute. The report also suggests that core inflation, which has been less affected by oil price fluctuations, may rise by 0.1 percentage points. The Korea Development Institute (KDI) released its report on May 11, analyzing the effects of recent increases in international oil prices on consumer prices. KDI forecasts that fluctuations in oil prices could raise the consumer price inflation rate by 1.0 to 1.6 percentage points starting in the second quarter of this year. If high oil prices persist, core inflation could face upward pressure through next year. Research indicates that a 10 percentage point increase in international oil prices (Dubai crude) leads to a 2.69 percentage point rise in domestic oil product prices. Typically, increases in Dubai crude do not affect core inflation. However, due to uncertainties in transportation, a 10 percentage point rise in Dubai crude could push core inflation up by 0.10 percentage points. This means that transportation uncertainties could trigger cost increases not only in oil products but also in industrial goods and services. While the initial impact of rising international oil prices on core inflation is smaller than on consumer prices, its persistence is expected to be greater. Nevertheless, some analysts believe that government measures, such as price ceilings on oil products, will prevent inflation from exceeding 3%. As of March, the price ceiling was estimated to lower the consumer price inflation rate by 0.8 percentage points, while recent reductions in fuel taxes are believed to have contributed to a 0.2 percentage point decrease. These high oil price countermeasures are also expected to partially alleviate the rise in core inflation. Ma Chang-seok, a KDI researcher, stated, "If we measure without considering the effects of the price ceiling on oil products and add in the impact of fuel tax reductions, inflation is unlikely to exceed 3%. However, without the price ceiling, a rate above 3% would be quite possible." The institute views the ongoing developments in the Middle East as uncertain, leading to significant uncertainty regarding future consumer price trends. It suggests that policies should be formulated considering the varying impacts of rising international oil prices on inflation. Ma emphasized, "While the rise in international oil prices may temporarily affect the prices of certain items, the degree of inflation and its ripple effects can vary depending on the core factors. Policies aimed at stabilizing prices must also prepare for the possibility that prolonged increases in international oil prices could destabilize expected inflation."* This article has been translated by AI. 2026-05-11 12:05:30
Minister Park Hong-keun Calls for Strengthened Central-Local Cooperation to Revive Solar Industry Park Hong-keun, the Minister of Economy and Finance, stated on May 8 that strengthening cooperation between the central government and local governments is essential for reviving the solar industry ecosystem. During his visit to Hanwha Solutions Q CELLS, a domestic solar cell manufacturer in Jincheon, Minister Park toured the production facilities for solar cells and modules and gathered feedback from officials. He highlighted the significance of the veranda solar power supply project in terms of securing energy supply chains and achieving carbon neutrality. However, he emphasized the need for the smooth implementation of energy transition projects, amounting to approximately 600 billion won, which are reflected in the supplementary budget for this year. An official from the company suggested that increased support is necessary to enhance the technological competitiveness of domestic firms, particularly in next-generation solar cells. In fact, the market share of domestic solar cell manufacturers dropped from about 50% in 2019 to around 25% in 2023, and it has recently fallen to just over 4%, highlighting the crisis facing the domestic industry. The Ministry of Economy and Finance believes that collaboration among the central government, local governments, manufacturers, and private associations is crucial for securing technological competitiveness and restoring the solar industry ecosystem. Minister Park plans to review the feedback gathered during the visit with relevant departments and consider it for the 2027 budget. He stated, "In addition to renewable energy supply projects like solar panels, we will implement various support measures, including research and development (R&D) and financial assistance, to enhance the global competitiveness of domestic producers." Additionally, Minister Park visited the Jincheon National Training Center to encourage athletes preparing for the Aichi-Nagoya Asian Games. He noted that 3 billion won has been allocated in the supplementary budget for the construction of an 'air mat' facility that allows for year-round winter training, pledging to improve the training environment for athletes.* This article has been translated by AI. 2026-05-08 14:33:26
Welfare Spending in South Korea Increased by 130 Trillion Won Over 18 Years South Korea's welfare spending has increased by over 130 trillion won in the past 18 years, primarily due to pension payments. This concentration of funds raises concerns about whether resources are being effectively allocated to other necessary areas. According to a report by the National Fiscal Research Institute, titled 'Trends and Implications of Welfare Sector Finance,' social welfare spending rose from 33.4 trillion won in 2008 to 165.9 trillion won in 2026, an increase of 132.5 trillion won.This year, the institute analyzed 344 detailed welfare projects, identifying 14 with budgets exceeding 1 trillion won, which accounted for 90.6% of total spending. This is up from 68.8% in 2008, indicating a steady rise in large-scale projects.Public pensions represent the largest portion of social welfare expenditures. The amount allocated to public pensions grew from 21.4 trillion won in 2008 to 97 trillion won today, maintaining a high percentage of total budget allocations at around 60% since 2008.The largest single expenditure among projects over 1 trillion won is the National Pension benefit payments, totaling 54.5 trillion won, followed by civil servant pension payments at 24.9 trillion won and basic pension payments at 23.1 trillion won.Kim Yong-won, a senior researcher at the National Fiscal Research Institute, noted, "From 2008 to 2026, total spending in the analyzed sectors increased by an average of 9.3% annually, with National Pension benefits rising by 14.5% and basic pensions by 16.0%, reflecting the impact of an aging population."Medical and livelihood assistance budgets were also significant, at 9.8 trillion won and 9.2 trillion won, respectively, but their average annual growth rates were lower than the overall average of 9.3%.Despite the focus on income security through public pensions, basic living security, which serves as public assistance, is limited to 22.2 trillion won, with social services at just 10.2 trillion won. These figures indicate that the budget for policies most directly felt by citizens is relatively low.When compared to other countries, South Korea's public social welfare spending remains low. According to OECD data, South Korea's public social welfare expenditure as a percentage of GDP rose from 6.8% in 2008 to 16.2% in 2022, while the OECD average increased from 18.5% to 20.5% during the same period.Although the United States has the lowest public social welfare spending among the G7 nations, it is projected to surpass South Korea by 4.5 percentage points in 2024, rising from 16.3% in 2008 to 19.8%.The findings indicate that while South Korea's social welfare spending has significantly increased, it remains below the levels of advanced nations, with expenditures concentrated in specific areas.The institute emphasized that while increased spending is necessary for transitioning to a welfare state, the concentration of funds in certain projects suggests that resources are not being allocated effectively. Kim concluded, "Our social welfare finance is still insufficient to be called a welfare state, necessitating detailed discussions and proposals for improvement in related areas." 2026-05-08 12:22:11
South Korea Establishes Arctic Route Committee to Boost Development The South Korean government is set to accelerate its Arctic route development initiative with the establishment of a new Arctic Route Committee under the Prime Minister's office, which will also focus on training professionals in related fields. On May 7, the Ministry of Oceans and Fisheries announced that three key bills—"Sustainable Coastal Fisheries Development Act," "Special Act on Promoting the Use of the Arctic Route and Supporting Related Industries," and amendments to the "Shipping Act"—passed the National Assembly. The Arctic route initiative is a major policy project for the ministry, which has already laid the groundwork by launching the Arctic Route Promotion Headquarters. The passage of the Arctic Route Special Act enables the formation of the Arctic Route Committee, which will facilitate the establishment of a basic plan, professional training, and financial support across government agencies. Additionally, the new legislation aims to reorganize the administrative framework for coastal fisheries, mandating reporting on fishing locations and catch data by species. It also establishes the basis for issuing catch certificates. The name of the state-subsidized route, which covers all operational losses, will change to "Public Route." The revised Shipping Act allows public institutions to manage these routes, enhancing safety through specialized oversight. The ministry plans to delegate some routes to public entities next year, with a full transfer expected by 2028. Minister of Oceans and Fisheries Hwang Jong-woo stated, "We will work diligently on the subordinate regulations and ensure the smooth implementation of the laws that have passed the National Assembly."* This article has been translated by AI. 2026-05-07 23:29:33
South Korea Speeds Subsidy Payments for Coastal Ferry Operators to Deploy Extra Budget The South Korean government will shorten the payment cycle for subsidies to coastal shipping companies and speed up disbursements to keep ferries running smoothly on routes often described as island residents’ lifeline. The Ministry of Oceans and Fisheries said May 7 it will quickly execute a total of 22.6 billion won in supplementary budget funds to support coastal shipping operators facing financial strain from a surge in global oil prices. The package includes oil price-linked subsidies and compensation for operating losses. Although the maximum price for marine diesel was set at 1,923 won on March 27, it remains about 32% higher than in February. Tax-free diesel rose 68.5% to 1,382 won, the ministry said. To accelerate support, the ministry revised the payment schedule for fuel tax subsidies (6.7 billion won) and oil price-linked subsidies (6.2 billion won). Amounts that were to be paid quarterly will instead be paid monthly. Local maritime and fisheries offices and the Korea Shipping Association plan to notify operators of application procedures and methods. Operating-loss compensation had been calculated based on deficits tallied at year’s end. To speed execution, the ministry will disburse part of the deficit incurred up to those points in June and August. It will then make a final payment within 30% of the deficit amount after an accounting review by the end of October, reflecting operating results from January through September. Of 99 coastal passenger routes, the ministry will disburse 2.9 billion won in additional operating-loss support for 42 routes by next month. Eligible routes include 29 state-subsidized routes and 13 deficit routes, including routes aimed at creating a “one-day living zone.” The remaining 57 routes will be supported using 6.8 billion won secured through a supplementary budget for the “2026 temporary operating-loss support project for short-term deficit routes.” Funds will be paid in three rounds at two-month intervals starting next month. The ministry said the subsidies are expected to ease some of the burden on operators covering losses on state-subsidized and deficit routes. Hwang Jong-woo, the oceans and fisheries minister, said coastal passenger ships are “like a lifeline” for South Korea’s coast and that disruptions could cause serious inconvenience for island residents. He said the ministry will “do everything possible” to support normal operations through rapid fiscal execution. * This article has been translated by AI. 2026-05-07 11:05:32
South Korea Launches Project to Give Sea Forests Official Names "I think you have to give it a name. How lonely would it be without one? I already named it 'Bonny.' Now I'll call this geranium 'Bonny.'" That line comes from the novel "Anne of Green Gables," when Anne names a geranium on the windowsill. The moment it has a name, it becomes more than just one plant among many. Naming something can be a gentle promise to care for it and stay with it. Underwater, South Korea has many places still waiting for that kind of attention: "sea forests." Sea forests are underwater areas where seaweeds such as kelp, Ecklonia and sea mustard grow in clusters, creating habitat for a wide range of marine life. They serve as feeding grounds and spawning and nursery areas, while absorbing carbon dioxide, releasing oxygen and helping clean the marine environment. The Ministry of Oceans and Fisheries said it created 375 square kilometers (145 square miles) of sea forests from 2009 through last year, an area more than half the size of Seoul. The term compares coastal seaweed beds that grow in sunlit waters to forests on land. Fish use these areas as spawning grounds and nurseries. They were previously referred to as seaweed grounds or seaweed forests, but the ministry said the term "sea forest" is now used. The sea forests built so far are large enough to absorb 127,000 tons of carbon dioxide a year, equivalent to emissions from 52,000 cars, the ministry said. In sea forests completed in 17 waters including Yeosu and Pohang from 2022 to 2025, a species-diversity index used to indicate ecosystem health rose 64.1% compared with before construction, it said. Even so, many of these sites have been recorded in project reports only by coordinates and administrative place names, such as the "Donghae Mukho sea forest" and the "Jeju Aewol-ri sea forest." The ministry contrasted that with well-known land forests and mountains that are remembered and protected by name. The ministry said places without names can be easier to overlook. When a sea forest is managed only as a set of coordinates, it can quickly fade from public memory after it is built. To change that, the ministry said it will launch a project called "Sea Forests, Adding Names" with Hyundai Motor Co. and the Korea Fisheries Resources Agency, both of which participate in sea-forest construction. The goal is to publicize sea forests and elevate them as places the public continues to watch and manage, described as a kind of "companion space." The first name created through the project is "Ullim," for a sea forest built in waters off Ulsan's Jujeon area. The ministry said the name carries the meaning of a "new forest of Ulsan" (蔚林) and reflects Hyundai employees' hope that the sea forest's recovery of marine ecosystems will spread as a powerful resonance. On May 10, Marine Planting Day, the ministry said the "Ullim sea forest" will also appear on map apps, turning an unnamed seaweed cluster into something more familiar, like a friend or neighbor. The ministry said the naming project is expected to expand into a global campaign, including in Argentina and Australia. South Korea designated May 10 as Marine Planting Day in 2012, the first in the world, to promote protection of marine ecosystems and awareness of the risks of ocean desertification. The ministry said it hopes the effort to name sea forests will help spur care and protection of sea forests worldwide.* This article has been translated by AI. 2026-05-07 09:36:15
South Korea to name medical facilities hoarding supplies; prioritize plastic feedstock for makers As concerns grow that the war in the Middle East could disrupt supplies of medical products, the South Korean government will investigate and publicly disclose medical institutions holding excessive inventories. It will also prioritize plastic feedstock for manufacturers to keep production running smoothly. The Ministry of Health and Welfare announced the steps in a report titled “Medical product supply and price trends and measures in response to the Middle East war,” presented at a special interministerial task force on cost-of-living management. The government said it will make the supply chain more transparent. It has been conducting daily monitoring in cooperation with six medical associations, and will add a weekly nationwide survey of medical institutions’ inventories to track stock levels, including comparisons with the same period a year earlier. It also conducted on-site inspections from May 4 to May 7 at 24 medical institutions suspected of buying excessive quantities of syringes. For items at risk of short-term shortages — including packaging for IV solutions, syringes, medicine packaging and dosing bottles — the government will ensure manufacturers receive raw materials first. The measures will continue through May, and the government said it plans ongoing management after June as well. Jung Kyung-sil, director general for health care policy at the ministry, said the government will publish daily supply-and-demand updates, including syringe production, shipments and inventories, “to ease public anxiety and encourage voluntary self-correction in distribution.” To help ensure stable supplies for high-demand facilities such as dialysis clinics, the government has operated a “syringe supply chain hotline” since April 16. Since it began, 970,000 syringes have been supplied to online malls, and 210,000 have been delivered to medical institutions. The ministry also said patients who need around-the-clock management, including those with rare diseases, will be able to buy medical products through telemedicine platforms. Through telemedicine intermediaries, buyers will be identified as having rare or intractable diseases and allowed to place orders by distinguishing between covered and noncovered items. Jung said the ministry determined that shortages on online malls were fueling anxiety among patients, adding that syringes have been delivered using telemedicine platforms since May 4. Separately, the disposal interval for general medical waste at clinics and public health centers will be temporarily doubled to 30 days from the current 15 days. The measure will remain in place until next month’s 30th. The ministry said hospitals generate large volumes of waste and fill containers and plastic liners within 15 days, while clinics often dispose of waste before containers are full because volumes are smaller. Jung said the government is not moving to institutionalize the longer disposal interval for clinics. She said hospitals structurally use large amounts of plastic, adding that formalizing the change “could be considered as one option” to reduce reliance on plastic products, but that further talks with the Ministry of Climate, Energy and Environment are needed and it is difficult to say whether it could be adopted permanently. The government also adjusted National Health Insurance reimbursement rates for treatment materials to reflect the strong-dollar environment. Based on exchange rates over the past three years, it changed the exchange-rate reference grade for treatment materials from the 1,100-won range to the 1,300-won range and raised it by 6%. As a result, the average reimbursement for 27,000 separately calculated treatment materials rose 2%, with an expected support effect of 6.7 billion won per month. In addition, the government will provide emergency management stabilization funds to small and midsize companies that manufacture plastic-based medical products. 2026-05-07 09:08:02