South Korea finalizes criteria for $200B strategic investment in US

South Korea has finalized the detailed criteria governing its $200 billion strategic industry investment in the United States, a follow-up measure to the Korea-US tariff negotiations. A project will proceed only if its projected returns to South Korea over the investment's lifetime are sufficient to cover the full principal and interest. The government has also established the operational framework for the Korea-US Strategic Investment Corporation and its fund management system, and spelled out the project screening process.

The Ministry of Finance and Economy and the Ministry of Trade, Industry and Energy said Tuesday that the Cabinet approved the enforcement decree of the Special Act on the Operation and Management of Strategic Investment between the Republic of Korea and the United States of America — commonly known as the Korea-US Strategic Investment Act.

The decree fills in the details delegated by the act itself. The Korea-US Strategic Investment Act, set to take effect June 18 as a legislative follow-up to the tariff negotiations, calls for $150 billion in investment in the shipbuilding sector and $200 billion in strategic industries including energy, semiconductors, critical minerals, AI and biotech.

The decree first defines the standard for "commercial viability" for the $200 billion strategic industry investments. A project is deemed commercially viable if the total projected returns distributed to South Korea over the expected life of the individual investment are sufficient to cover the full principal and interest on that investment.

The expected lifespan of each project will be determined through consultations between South Korea and the United States. The interest rate used to calculate principal and interest will be set at the yield on 20-year US Treasury bonds at the time of investment, plus a spread agreed upon by both countries.

Other commercial viability criteria will be set by the Minister of Trade, Industry and Energy through consultations with the United States, following deliberation and approval by the Korea-US Strategic Investment Steering Committee, which is chaired by the Deputy Prime Minister and Minister of Finance and Economy.

The project selection process has also been fleshed out. When the Korea-US Strategic Investment Project Management Committee — chaired by the Minister of Trade, Industry and Energy — submits a project to the Steering Committee for consideration, it must report the results of the commercial viability review, legal and strategic considerations, recommendations for participating domestic companies, US government support, and projected return assessments. For projects that do not meet the commercial viability threshold, the committee must also assess their impact on national security and supply chain stability.

The decree also sets out how the Steering Committee and Project Management Committee will be composed and operated. Beyond the existing members from the Ministry of Finance and Economy and the Ministry of Trade, Industry and Energy, the government added the Ministry of Foreign Affairs, the Ministry of Planning and Budget and the Financial Services Commission as standing member ministries. Government members will be designated by each committee chair from among relevant ministers and vice ministers on a case-by-case basis.

Eligibility requirements for private-sector members have also been specified. Private members of the Steering Committee may include those with at least 10 years of experience in financial investment or strategic industries, drawn from government bodies, public institutions, financial institutions or international financial organizations, as well as Korean or US-licensed attorneys and certified public accountants. Private members of the Project Management Committee will be drawn from those with experience establishing or acquiring US-based subsidiaries, or with a track record in assessing the feasibility of overseas investment projects.

Under the Steering Committee, specialized subcommittees may be established to cover areas including finance, financial markets and foreign exchange; industry, technology and investment; risk, legal affairs and regulation; and diplomacy, trade, security and supply chains. Under the Project Management Committee, subcommittees may be set up to review advanced industries and supply chains; energy and critical minerals; shipbuilding; investment, finance, accounting and risk; and legal and regulatory matters — bolstering the committees' technical expertise.

The Korea-US Strategic Investment Corporation, to be established under the special act, will operate for 20 years from the date of its incorporation registration. Its statutory capital of 2 trillion won (approximately $1.45 billion) will be paid in cash by the government in annual installments. Korea Overseas Infrastructure and Urban Development Support (KIND) has been added to the list of agencies to which the corporation may delegate work, joining the Export-Import Bank of Korea, Korea Development Bank, Korea Trade Insurance Corporation, Korea Investment Corporation and Korea Ocean Business Corporation.

The issuance of Korea-US Strategic Investment Bonds — the instrument for raising funds for the Korea-US Strategic Investment Fund — will follow the procedures for issuing export-import finance bonds under the enforcement decree of the Export-Import Bank of Korea Act. Transfers between fund accounts to address temporary liquidity shortfalls may be carried out with Steering Committee approval.

The government has also defined the composition and duties of the Project Management Office to be established within the Ministry of Trade, Industry and Energy, and laid the groundwork for designating a dedicated agency to provide specialized project review support. Direct costs incurred during the office's review of candidate US investment projects may be covered by the Korea-US Strategic Investment Corporation through the Korea-US Strategic Investment Fund.

The government plans to move quickly through the promulgation process for the decree approved Tuesday, with both the special act and its enforcement decree set to take effect together on June 18. The Korea-US Strategic Investment Corporation is to be launched on that date, completing the legal and institutional foundation needed to implement the strategic investment agreement between the two countries.

Meanwhile, actual US investment projects will be decided only after the special act takes effect, following a rigorous review of commercial viability and other factors by the Project Management Committee, comprehensive deliberation by the Steering Committee, reporting to the National Assembly, and consultations with the United States — all as required under the relevant laws and the memorandum of understanding between the two sides.