The Korea-U.S. Strategic Investment Corporation wired its first $2.4 billion (about 3.27 trillion won) immediately after U.S. President Donald Trump formally announced the investment projects in the United States.
"With President Trump's announcement, the investment plan for the U.S. is finalized," a government official said in a telephone interview with The Seoul Economic Daily on the 1st. "We completed the procedures to wire the first $2.4 billion right after the announcement." The money will go into a liquefied natural gas (LNG) combined-cycle power plant project in Encinal, Texas, for which both the specific scope of work and the detailed timeline have been agreed. The Encinal plant project is valued at $22.3 billion in total.
The government is understood to have prepared the transfer from the time the agreement on the U.S. investment projects was in its final stages. It had planned to send the funds around the end of September, once the U.S. side confirmed the project following the government's report to the National Assembly on its U.S. investment plan on Sept. 22, but the transfer slipped to Oct. 1 as the U.S. announcement was delayed.
The timing was aligned with Trump's announcement because the authority to declare the U.S. investment projects rests with the U.S. president. The memorandum of understanding (MOU) on investment in the U.S. signed by the two countries last year states that the president of the United States holds final decision-making authority over the investments.
Before making a final selection, however, Trump must receive project recommendations from an investment committee chaired by Commerce Secretary Howard Lutnick. The committee must consult with Korea on projects either directly or through a consultative committee chaired by the minister. Even after the government completes domestic procedures through its report to the National Assembly, the U.S. investment projects are finalized only after administrative steps on the U.S. side.
Under the bilateral agreement, the government will also send $10 billion in advance payments by the end of the year for a project to build eight nuclear reactors in the United States. The approach moves up the disbursement schedule in exchange for using the funds to place early orders with Korean companies for long-lead nuclear equipment. That transfer is conditioned on consultations over the specific project and on meeting commercial reasonableness requirements, so it is expected to be sent after further negotiations.
The amount sent to the United States each year will not exceed $20 billion. The two countries agreed to write into a legally binding operating agreement a clause ensuring that the previously agreed strategic investment total of $200 billion and the annual transfer ceiling of $20 billion are not exceeded. It is a safeguard designed to keep the overall transfer burden from growing even if costs rise on individual projects. The two sides also agreed to maintain a 50-50 profit split on all projects until the full investment principal and interest are recovered, strengthening the arrangement's risk-pooling function.
