Seoul, Nov 3 Seoul’s envisioned $200 billion investment in the United States will first flow into South Korean companies operating in the country, the industry minister said on Monday.
“The $200 billion cash investment is not just money we are giving to the U.S.,” Industry Minister Kim Jung-kwan said during his meeting with chief executive officers (CEOs) of medium-sized enterprises, referring to the details of Korea’s investment commitment to the U.S. under the tariff deal reached between the two countries last week. “The benefits will be structured to give priority to our companies entering the U.S. market.”
Kim explained investments will be made on projects agreed upon by both sides through a joint investment committee that will be chaired by U.S. Commerce Secretary Howard Lutnick and a cooperation committee headed by himself, reports Yonhap news agency.
“The $200 billion investment will be made based on commercial rationality. Simply put, it will be directed to businesses capable of generating cash flow,” he said.
On Wednesday, Seoul and Washington finalized an agreement on the details of Seoul’s $350 billion investment pledge made in exchange for the lowering of U.S. tariffs.
Under the final terms, the investment will consist of $200 billion in cash installments and $150 billion allocated for bilateral shipbuilding cooperation, with an annual cap set at $20 billion.
Kim said the two countries have nearly completed a memorandum of understanding and a joint fact sheet on their recently finalized tariff deal.
“Until now, Korean companies had to finance themselves to start a business in the U.S., but they will have another option (with the tariff deal),” he stressed, calling on medium-sized firms to actively consider utilizing the envisioned Korea-U.S. investment fund.
Regarding U.S. President Donald Trump’s remarks that he was a “very tough” negotiator, Kim said he considers it an “honor for my family,” noting he has been called tough “by the toughest person in the world.”
Trump made the remarks during his special address for the Asia-Pacific Economic Cooperation (APEC) CEO Summit held in the southeastern city of Gyeongju last week.
Meanwhile, Vice Industry Minister Moon Shin-hak said in a separate press briefing that the government is working to assess the potential impact of Seoul’s massive investment plan in the U.S.
“Korean conglomerates have been executing their ‘mother factory’ strategy well, but we will have to see if they can maintain and develop the strategy,” Moon told reporters, referring to concerns Seoul’s investments in the U.S. may weaken the companies’ domestic investments.
Mother factory strategy refers to a tactic where businesses operate a main factory for the technological development and production of high-value products in their home country, while outsourcing less important projects to their overseas plants.
On the ongoing discussions between the government and petrochemical companies on an industrial restructuring plan, Moon said his ministry will finalize the plan by the end of this year.
In August, the government announced its road map on helping the ailing petrochemical sector’s “voluntary” restructuring efforts aimed at tackling the industry-wide crisis stemming from a global oversupply.
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