South Korea's trade, industry and energy ministry (Motie) has proposed raising its overall budget for next year to 11.2 trillion won ($8.47bn), with more funds allocated to ensuring energy security.
The proposed budget marks a 1.3pc increase from this year's budget and focuses on "fostering high-tech industries, revitalising the domestic economy and strengthening energy security", Motie said. It maintains a strong focus on developing high-tech industries such as semiconductors but places more emphasis on ensuring energy security.
The budget allocation is distributed across three main sectors — energy, industry and trade. Motie's energy sector budget is projected to rise to around W4.8 trillion next year, from W4.35 trillion this year.
A substantial portion of the proposed energy budget, or about 43pc, is allocated to bolstering South Korea's energy security and stabilising resource supply chains. Motie is dedicated to enhancing energy security by accelerating projects aimed at restoring nuclear operations to ensure power supply stability. Financial support for nuclear projects is set to rise to W11.2bn next year, up by 26pc from W8.9bn this year.
The proposed budget also earmarks W855bn to boost South Korea's supply chain resilience for key resources, up from W677bn this year. This includes initiatives to stockpile oil, lithium and other rare earth metals.
Motie's commitments to energy security extends to maintenance of its strategic oil reserves, with projected investments in domestic and overseas oil fields increasing to W48.14bn from W30.13bn this year. It also plans to continue stockpiling oil, with a target of 100mn bl by 2025. State-owned KNOC held 96mn bl of reserves, excluding international joint stockpiling reserves, as of June.
South Korea depends heavily on imports to cover more than 90pc of its energy needs. The Middle East is South Korea's largest crude supplier, delivering around 70pc of total imports of 2.64mn b/d in July, the same as a year earlier, according to KNOC.
Motie is also establishing a new fund of W4.4bn to research and develop technology for extracting lithium from salt lakes.
Industry, trade budget proposals
Motie has proposed to cut its budget for the industrial sector next year, but raise trade sector funding.
It has proposed allocating W5.14 trillion to the industrial sector, down from W5.73 trillion this year and W5.62 trillion in 2022.
Motie is looking to allocate W2.16 trillion to enhancing the global competitiveness of advanced industries like semiconductors, batteries and electronics, up from this year's budget of W1.93 trillion. A new loan programme is being introduced as part of this allocation to support small and medium-sized enterprises (SMEs) in advanced industries with high growth potential, with W100bn earmarked for this purpose.
Trade sector funding is proposed to rise from W804.5bn this year to W1.11 trillion next year as Motie hopes to support exports and resolve difficulties being faced by South Korean exporters, although it did not explain further. South Korea is one of the world's largest semiconductor exporters, accounting for 20pc of the global semiconductor market, and is a major battery manufacturer.
Motie's proposed budget for 2024 will be submitted to parliament in early September and is expected to be approved and finalised in December.
