[Editorial] South Korea must take measures to combat hollowing out of domestic industries amid headwinds from large-scale US investment

Although the high tariff shock from the US has been eased by the conclusion of the Korea-US tariff negotiations, there are concerns that large-scale investment in the US could hollow out domestic industries.
This is because the US has agreed to reduce the tariff burden on South Korea by lowering the reciprocal tariff from 25% to 15%, and in return, the South Korean government has promised to invest $350 billion in the US.
This is only the size of the investment fund in the US, which includes the government's cash investment of $200 billion and company-led investment in the shipbuilding industry of $150 billion.
This will inevitably reduce the domestic investment capacity of the government and companies. During the tariff negotiations, the total investment amount pledged by the government and companies in the United States reached $500 billion.
Converting this to the current exchange rate, it amounts to 716 trillion won in South Korean won. This is almost the same amount as the 728 trillion won budget proposal for next year that the government submitted to the National Assembly. Of course, that's it.
The US initially demanded the full amount be paid upfront, but the Korean government persistently negotiated and agreed to a US investment fund that would be divided into cash investments over the next 10 years.
The annual limit was also set at $20 billion (approximately 28.6 trillion won). However, even this limit is still less than the 22% of South Korea's direct investment in the US last year.
This is more than 90% of the total investment of $800 million. This large-scale investment in the United States is not only beneficial for the United States. It is also beneficial for domestic companies involved in the specific projects that will be carried out with the funds.
However, with government and corporate investments concentrated in the US, there is a high risk that domestic investments will shrink.
The government will have to send a quarter of the 4 trillion won to the US, and companies will have to invest an equal amount in the US. This will result in a reduction in domestic investment and a vacancy in industry.
There are concerns about the impact of the hollowing out of the economy and sluggish employment. The government must be fully prepared to take measures to stimulate domestic investment and create jobs at the same time. If we remain vague, we will miss the opportunity to prevent a backlash later.
Measures are needed to revive the industry as a whole, focusing on new growth areas such as artificial intelligence (AI). Attracting more foreign direct investment is also an important issue.