Lee vows bold investment in AI, future growth engines for 'growth for all'

President Lee Jae Myung on Monday pledged bold investment in artificial intelligence (AI) and other future growth engine industries to boost South Korea's economic growth potential and ensure what he called "growth for all." He made the pledge in a speech at the National Assembly, where he called for bipartisan support for the passage of the 2027 budget bill. The government submitted the bill in September, proposing 820.9 trillion won (US$614.5 billion) in total government spending next year, up more than 10 percent from this year.

Budget Bill and Future Fund

Lee said the 2027 budget bill would make South Korea a leader and secure its dominance in the future while turning national growth into growth for the people. He called the 160 trillion-won Future Fund a strategic investment platform that will buttress a rebound in the country's growth potential and help reduce deep social gaps. Under the largest-ever budget bill, 45.4 trillion won of the fund is to be allocated for the first time next year to support younger generations, promote economic growth engines and boost regional development. The total 2027 expenditures of 820.9 trillion won mark the biggest-ever fiscal investment, representing a 12.8 percent increase, the biggest annual growth on record, according to Lee. He said the expanded spending reflects higher living standards South Koreans deserve and the need to strengthen the country's future capabilities.

AI, Semiconductors and Strategic Technologies

The sharp increase in the 2027 budget was made possible by expectations of higher tax revenue amid record high profits at semiconductor giants, including Samsung Electronics Co. and SK hynix Inc., fueled by the AI boom that boosted chip demand. The government will inject 21.3 trillion won into building a semiconductor manufacturing hub and data centers, developing physical AI and promoting AI under its "three megaprojects." With a separate allocation of 4.6 trillion won, it will seek to acquire a sovereign AI model with the world's highest performance. Lee also said 13.8 trillion won will be spent to secure absolute competitiveness in 10 strategic technology sectors that will spearhead future economic growth.

Social Support, Defense and Budget Deadline

Lee noted persistent economic inequality and polarization in South Korea, pledging to lay the "social security mat" through "three livelihood projects" aimed at providing employment, financial and housing support for the underprivileged. He highlighted an 8.2 percent increase in next year's defense budget to 73.3 trillion won, saying the government plans to acquire military assets needed for Seoul to retake wartime operational control (OPCON) of its troops from Washington, such as nuclear submarines and KF-21 fighter jets. He said "countless tasks and challenges," as well as a fast-changing global security environment, make it necessary for rival parties to join hands to build the country's future and improve people's lives. He asked lawmakers to help pass the budget bill by Dec. 2, the statutory deadline for the 2027 budget. His parliamentary speech was met by protests from members of the main opposition People Power Party, who accused the government of increasing the national debt.

Sources: Yonhap · Reuters · CNBC