Key facts
- South Korea plans to create a "Future Response Fund" using tax windfalls from its semiconductor industry.
- The fund will finance programs for young people, including employment, housing, and family support.
- It will also invest in artificial intelligence and other strategic growth industries.
- Financing will come from tax revenue exceeding a benchmark based on a decade of average growth.
- The government plans to submit legislation for the fund alongside its 2027 budget proposal.
South Korea is planning to establish a new "Future Response Fund" to utilize tax revenues generated from the country's booming semiconductor sector. The fund aims to address pressing social issues such as low birth rates and housing affordability by supporting younger generations, while also driving investment in future growth industries like artificial intelligence.
The initiative, announced by the budget ministry, would channel excess tax revenue collected during strong economic periods into various programs. These include initiatives focused on youth employment, housing assistance, asset building, marriage, and childbirth. Simultaneously, the fund will support strategic investments in AI and other key technologies crucial for future economic development.
South Korean chip giants Samsung Electronics and SK Hynix have experienced significant earnings growth due to the high demand for chips driven by the AI boom. While an official size for the fund has not been provided, South Korean media reports suggest it could exceed 100 trillion won ($72.28 billion), based on government projections for next year's tax revenue and other anticipated inflows.
President Lee Jae Myung has committed to enhancing opportunities for young people, acknowledging challenges like low birth rates, housing costs, and labor market difficulties. Government data indicated a rise in the youth unemployment rate to 6.8% in July, with concerns that AI advancements could further impact job prospects for younger workers. The plan also involves an overhaul of education funding to prioritize talent development and lifelong learning. The government intends to submit the relevant legislation to parliament alongside its 2027 budget proposal next month.