$350 Billion Investment Restrictions Lifted... Korea-US Investment Corporation to Officially Launch Tomorrow

Outline of the First Project Expected Soon

The Korea-US Strategic Investment Corporation, which will oversee the $350 billion investment in the United States between South Korea and the US, will be launched on June 18, officially announcing the 10-year fundraising and investment execution schedule. As the investment gates open, the outline of the 'first project' is also expected to emerge soon. Currently, sectors such as the construction of a liquefied natural gas (LNG) terminal in Louisiana, Korean-style nuclear power plants and small modular reactors (SMRs), and power grid expansion are being strongly considered in the energy field.

According to relevant ministries on June 17, the Korea-US Strategic Investment Corporation will hold its inauguration ceremony at its office in Naseong-dong, Sejong City, in the afternoon of June 18, marking its official launch. The corporation's capital is set at 2 trillion won, to be contributed incrementally by the government. The organization will be structured with up to 3 directors, including the president, and a total of up to 50 members. It is reported that a new individual, not Park Wonjoo, the Strategic Economic Cooperation Division Director of the National Economic Advisory Council, who was previously considered a strong candidate, has been appointed as the first president. The Office of the President has recently completed personnel verification procedures and will make the official announcement in the afternoon.

The corporation is responsible for securing and executing a $200 billion cash investment, to be allocated annually up to $20 billion over 10 years, across strategic industries jointly determined by the two countries, including shipbuilding, semiconductors, energy, critical minerals, and artificial intelligence (AI), as well as raising and investing an additional $150 billion for shipbuilding cooperation. In principle, the Korea-US Strategic Investment Fund will be used in accordance with the 'Special Act on the Operation and Management of Korea-US Strategic Investment' (hereinafter referred to as the Korea-US Strategic Investment Special Act), which takes effect on this day, but public-private joint ventures (JVs) are also being considered. In the recently drafted enforcement ordinance of the Special Act, the government specified 'commercial reasonableness'—the core investment criterion—as "when the total expected income can fully cover the principal and interest of the investment." In other words, only projects that can recover both principal and interest will be considered for investment. The interest rate will be determined by adding the extra rate agreed upon by the Korean and US governments to the yield on 20-year US Treasury bonds. As of this day, the yield on 20-year US Treasuries stands at 4.943%.

Although the investment gate has opened, the first investment destination remains undecided. An official from the Ministry of Economy and Finance stated, "Specific projects will be finalized in accordance with the procedures stipulated by law, including review by the Project Management Committee and final deliberation by the Steering Committee, followed by reporting to the National Assembly and detailed consultations with the US government, immediately after the Special Act comes into force." Amid the prolonged period of high exchange rates, with the won-dollar rate exceeding 1,500 won for an extended time, it is reported that Deputy Minister for International Affairs Moon Jisung of the Ministry of Economy and Finance visited the US on June 12 to meet with senior officials at the US Treasury Department to discuss the foreign exchange market and US investment-related issues. In accordance with the joint fact sheet formalized by both Korea and the US, if instability in the foreign exchange market (disorderly movement) increases, Korea can request the US to adjust the scale and timing of remittances for US investments.

The government is expected to announce the first investment destination within this month. Although the Louisiana LNG export terminal was once a strong contender, recently, energy infrastructure projects such as new nuclear power plants, SMRs, and power grids have emerged as more likely candidates. The general view is that the Louisiana LNG project, with an investment scale reaching several tens of billions of dollars, is considered too large and risky as the first project, while nuclear power and power grid projects are seen as having greater business potential in light of rising electricity demand due to the expansion of AI data centers. Another advantage is that Korean companies can more easily participate in overall engineering, procurement, and construction (EPC), equipment supply, and supply chain activities. Previously, it was reported that Minister of Trade, Industry and Energy Kim Jeonggwan visited Washington, D.C. last month and discussed the first project announcement through high-level consultations with US Secretary of Commerce Howard Lutnick and others.

The government is also considering the possibility of announcing multiple projects that have completed reviews together, rather than selecting a single initial project as the first investment destination. A government official said, "There is a significant internal view that the very concept of a 'first project' could change," adding, "The Ministry of Trade, Industry and Energy is currently conducting preliminary negotiations on several candidate projects, and there is a possibility that multiple projects may be announced simultaneously, rather than selecting a specific project first."

This content was produced with the assistance of AI translation services.