South Korea is planning to establish a new sovereign wealth fund focused on strategic and commercial investments, modeled after Singapore’s Temasek.

The finance minister announced that the government intends to start with a relatively modest amount of capital, but ultimately aims to turn the fund into a significant global investment vehicle. “Like Temasek, which began small and grew substantially, we want to create a structure that can scale over time,” the minister said after a briefing with the president.

Unlike the existing Korea Investment Corporation (KIC), which manages part of the country’s foreign currency reserves, the new fund will operate under a different model. KIC is limited in its ability to make aggressive or high-risk investments due to its primary role in reserve management. “KIC cannot pursue bold mergers and acquisitions or make high-yield strategic investments, as its main task is to manage foreign reserves,” the minister explained. In contrast, the new fund will have the freedom to invest in promising sectors without such restrictions.

The government expects the new vehicle to channel funds into sectors with strong long-term growth potential, such as biotechnology, semiconductors, and other emerging industries. The fund will be able to engage in mergers and acquisitions and acquire a range of assets—from real estate to strategic technologies—focusing on areas where national interests and commercial benefits align.

It is noted that the fund will enjoy broad investment flexibility: “If a sector can deliver returns of 10% or 20% and does not raise ethical concerns, the fund should have the ability to invest—both domestically and internationally,” the minister emphasized.