The South Korean government has drawn up a budget of more than 13 trillion won for the Ministry of Trade and Industry next year. Even after the energy office's budget moved to the Ministry of Climate, Energy and Environment, sharp increases in spending on manufacturing artificial intelligence transformation (M.AX) and the government's regional growth initiative pushed the total to its largest level since the ministry's launch in 2013.
The ministry said on the 1st that its 2027 budget was set at 13.2573 trillion won, up 40.5% from this year. Including 911.8 billion won in ministry projects budgeted under the Future Response Fund overseen by the Ministry of Planning and Budget, the ministry's effective budget totals 14.1691 trillion won, an increase of 4.7349 trillion won, or 50.2%, from 2026.
A total of 3.7261 trillion won will go to M.AX-related projects, a 128% increase from 1.6309 trillion won this year. The budget allocates 120 billion won to build a "full-stack AI factory," in which AI runs an entire manufacturing plant using domestic technology, and 115.8 billion won to establish a "manufacturing data library" to systematically and securely collect and manage high-quality field data obtained through various manufacturing AX projects. Another 119.3 billion won will be spent on training "job-ready young AX talent" who can apply AI effectively on the shop floor based on data, centered on regional flagship universities, and on building an M.AX autonomous manufacturing ecosystem.
Research and development spending on advanced semiconductor industries rose nearly 15% to 54.1 billion won from 47.2 billion won this year. As part of special incentives tied to the administrative integration of Gwangju and Jeonnam, the government will provide 1.5 trillion won in fiscal support for a project to develop a semiconductor cluster in the southwestern region. The local government can use the funds freely as long as they go toward building and operating the semiconductor cluster. A separate semiconductor special account of 2.6 trillion won will be used to develop semiconductor clusters in Yongin and the Chungcheong region and to foster next-generation chip industries.
Spending on region-led growth under the five-hub, three-special-zone plan rose 62% to 2.0731 trillion won from 1.2797 trillion won this year. The government will create a 700 billion won special growth engine subsidy to attract large-scale regional investment by anchor companies and will significantly expand facility subsidies for large regional investments. Regional investment subsidies and subsidies for companies returning to Korea will also be restructured so that the government pays companies directly, rather than through local governments as before. A new large-scale R&D program worth 140 billion won was also created to nurture growth engines in each region.
Budgets for strengthening resource security and responding to the trade environment also rose sharply. Spending to strengthen response capacity for global supply chain crises involving oil and critical minerals nearly doubled to 3.6825 trillion won in 2027 from 1.9964 trillion won this year. Details include 328.7 billion won for investment in petroleum stockpiling, 42.5 billion won to support upgrades of refining facilities for diversified crude, and 3.5 billion won for developing technology to pretreat non-Middle Eastern crude and apply it in refining processes.
The ministry also budgeted 1.4497 trillion won to compensate for fourth-quarter losses stemming from the oil price ceiling program. The 4 trillion won set aside this year as a reserve fund through a supplementary budget must be used up within the year. If the price ceiling remains in place through the fourth quarter, settlement will inevitably take place next year, so the funds were budgeted in advance. The ministry also created a new 1.4 trillion won resource security fund to secure medium- to long-term financing for building stable supply chains for resources essential to Korean industry and for strengthening resource security.
Spending on responding to the trade environment and boosting the competitiveness of exporters rose 9.6% to 898.1 billion won from 819.1 billion won this year. Also notable is the creation of a 6.8 billion won project to build a foundation for strategic investment cooperation with the United States, which includes a budget for a project management team to carry out investments in the U.S.
