Seoul: The industry ministry announced on Monday its proposal for a record 13.88 trillion won (US$9.97 billion) budget for the upcoming year, aiming to revitalize the economy and bolster trade measures amidst global uncertainties. This budget proposal signifies a 21.4 percent increase from the 2025 budget of 11.4 trillion won, as stated by the Ministry of Trade, Industry and Energy.
According to Yonhap News Agency, if the National Assembly approves the proposed budget, it will be the first instance where the ministry's budget exceeds 13 trillion won. A significant portion of the budget will focus on the AI transformation of the manufacturing sector, with a planned budget increase to 1.1 trillion won in 2026. This initiative aims to address challenges posed by a shrinking workforce and slowing growth rate.
The ministry has allocated 220 billion won for a project to construct at least 500 AI factories by 2030. An additional 402.2 billion won is earmarked for developing physical AI, including humanoid robots, on-device AI chips, and AI software for various industries such as automotive and home appliances.
Furthermore, the ministry plans to increase its 2026 budget for advanced industries to 1.6 trillion won, up from 1.3 trillion won this year. This budget will focus on developing core technologies like mini-semiconductor fabrication, advanced chip packaging, icebreaker operations for Arctic routes, and advancements in battery and display sectors.
Specifically, the ministry has allocated approximately 30 billion won for shipbuilding cooperation between South Korea and the United States. This includes 6.6 billion won for a Korea-U.S. technology cooperation center, 5 billion won for enhancing the global competitiveness of Korean companies in the naval maintenance, repair, and overhaul market, and 7.7 billion won to support small and medium-sized shipbuilders in the U.S.
In July, South Korea committed to investing $150 billion in shipbuilding cooperation with the U.S. under the "Make American Shipbuilding Great Again" project and an additional $200 billion for other advanced industries, as part of a tariff agreement with the Trump administration.
Moreover, the ministry has earmarked 1.27 trillion won for the transition to renewable energy, marking a 42 percent increase from 2025. This budget will support the use of renewable energy, development of next-generation small modular reactors, and the government's plan to establish high-voltage direct current infrastructure nationwide by the 2040s.
The ministry also proposes 1.7 trillion won to address global trade uncertainties, marking a substantial 67.8 percent increase from its 2025 budget. Of this, 600.5 billion won will contribute to the trade insurance fund, partly linked to the U.S. industrial cooperation projects, and 42.4 billion won will be allocated for emergency export vouchers for small and medium-sized enterprises.
Additionally, 50 billion won is set aside to support the overseas expansion of logistics firms and promote exports of Korean consumer goods, leveraging the global popularity of K-culture. For supply chains, a proposed budget of 2 trillion won for the next year reflects an 11.8 percent increase from the 2025 budget, aiming to foster the development of materials and parts for strategic industries.