Samjong KPMG urges private investment ecosystem for productive finance

Samjong KPMG has released a report titled ‘Changing the Flow of Capital: Current Status and Challenges of Productive Finance,’ emphasizing the need to build an investment ecosystem that attracts private long-term capital. This comes as the South Korean government pursues a 1,560 trillion won productive finance support plan over the next five years, consisting of 628 trillion won from private finance and 932 trillion won from policy finance.

The report highlights that while the government plans to expand investment in advanced strategic industries—such as AI, semiconductors, secondary batteries, vaccines, and displays—through a 200 trillion won National Growth Fund, there are risks. These include the ‘crowd-out effect’ where government supply might stifle private investment, as well as potential issues like excessive concentration of funds, overlapping investments, and distorted corporate valuations.

To ensure success, Samjong KPMG suggests moving beyond simple capital supply amounts toward a long-term performance management system that evaluates productivity, employment, and technological innovation. They also recommend establishing risk-sharing frameworks to protect financial institutions' stability while investing in high-uncertainty innovative sectors. The report concludes that South Korean productive finance must evolve from a government-led supply model into a self-sustaining, private-sector-driven ecosystem.