The Chief of Korea’s Presidential Council on National Competitiveness, Kang Man-soo, delivered a provocative message to President Lee Myung-bak today. He said the government should use the SWF to advance strategic and national interests abroad. Here’s Kang’s statement:
“We will seek to strengthen Korean companies’ global investment capabilities to encourage M&As of competent overseas firms, especially in the energy and resources sector.”
And here’s The Korea Herald reporting on the meeting:
“Kang said the scope of asset management by the sovereign wealth fund Korea Investment Corporation will be expanded to help finance M&As abroad.”
According to the article, the idea is to “benchmark” Chinese policy:
A presidential council said Tuesday it will support Korean businesses’ mergers and acquisitions of foreign companies as part of efforts to raise national competitiveness…Beijing has backed Chinese businesses’ overseas M&As since 2009, using its $2 trillion foreign reserves.”
So let’s add Korea to the list, along with Japan and India, of countries who are actively (and transparently) considering using SWFs to achieve strategic and political objectives. I just wrote a post on the politicization of SWFs (see the good comments as well), so I won’t repeat myself here. However, I will say that there does seem to be a growing recognition among these Asian economies that energy security is one of the pressing challenges of the 21st century. And just like the present “currency war”, it seems this looming “resource war” will be fought in virtual space: the global financial market.