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President announces $506 billion budget for 2026 with focus on 'AI era'

Published: 04 Nov. 2025, 19:16

President Lee Jae Myung delivers a speech on next year's budget at the National Assembly in Yeouido, western Seoul, on Nov. 4. [LIM HYUN-DONG]

President Lee Jae Myung on Tuesday declared that 2026 would mark the historic beginning of Korea’s AI era, using his annual budget speech at the National Assembly to unveil a 728 trillion won ($506 billion) proposal that includes sweeping investments and a vision for national transformation through cutting-edge technologies.

In the 22-minute address, Lee mentioned AI 28 times, underscoring his administration’s focus. “Next year will be the starting point of a new century for Korea, led by the age of AI,” he said.

Calling the 2026 budget proposal “the first budget to open the AI era,” Lee announced plans to triple government investment in related projects to 10.1 trillion won, up from 3.3 trillion won this year.

Lee stressed the urgency of the transition. “In the industrial era, being a day late meant falling behind by a month; in the information age, it meant a year. In the age of AI, falling behind by a single day could mean an entire generation,” he said.

Taking aim at the previous Yoon Suk Yeol administration, Lee said, “It not only wasted precious time, but even slashed research and development [R&D] budgets, taking Korea backward.”

Lee invoked past presidents from both sides of the political spectrum to justify his push: “Just as President Park Chung Hee built the highways of industrialization and President Kim Dae-jung laid the roads for informatization, we must now build the highways of the AI era to usher in a future of growth and progress.”

Notably, Lee made his first public mention of the concept of “physical AI” — artificial intelligence embedded in robots and machines that operate in the physical world. He pledged focused investment in key projects leveraging Korea’s strong manufacturing capabilities and data, and said the government would establish regional physical AI hubs nationwide. About 6 trillion won will be allocated to this effort over the next five years.

President Lee Jae Myung exits the main chamber of the National Assembly after delivering a budget speech as lawmakers applaud in Yeouido, western Seoul, on Nov. 4. [LIM HYUN-DONG]

Nvidia CEO Jensen Huang, who met Lee in Seoul on Friday, expressed a strong interest in cooperation and said Korea has significant potential to become a global leader in physical AI, especially in industrial robotics.

Lee also linked AI with national defense, proposing that the technology be used to upgrade Korea’s conventional weapons systems into advanced military platforms. Citing Korea’s top-five global military ranking and defense budget — 1.4 times North Korea’s GDP — Lee said, “Depending on external forces for our national defense is a matter of national pride.”

While noting recent signs of recovery — including 1.2 percent GDP growth in the third quarter and the Kospi’s rise above 4,000 — Lee warned against complacency. “If we fail to read the changes and merely follow others, we will face endless decline,” he said. “AI is not just an opportunity — it is our path to survival.”

He said next year’s R&D budget would reach a record 35.3 trillion won, a 19.3 percent increase from this year, with a focus on core technologies in AI, defense and strategic industries.

Beyond technology, Lee also emphasized efforts to reduce inequality across social and regional lines, promising increased support for low-income groups and people with disabilities, and pledging to end Seoul’s dominance by implementing a new fiscal framework that prioritizes regional development under a “five poles and three special zones” vision.

President Lee Jae Myung walks past silent protestors from the conservative People Power Party (PPP) as he arrives at the National Assembly in Yeouido, western Seoul, to deliver a budget speech on Nov. 4. PPP lawmakers hold placards condemning the special counsel’s arrest warrant request for former floor leader Choo Kyung-ho. [JOINT PRESS CORPS]

Acknowledging the absence of opposition lawmakers — conservative People Power Party lawmakers boycotted the session — Lee said, “Though there are differences in opinion between the ruling and opposition parties, I believe our sincerity for the country and people is the same. I ask for bipartisan cooperation so this budget can pass within the legal timeframe.”

Noting the empty seats before beginning his speech, Lee remarked, “It feels a little empty.”

Lee also summarized Korea’s recent diplomatic efforts, including discussions with the United States on nuclear-powered submarines and the outcomes of the Asia-Pacific Economic Cooperation (APEC) summit held in Gyeongju, North Gyeongsang.

He said Korea and China agreed to “fully restore bilateral relations and move forward on a path of practical cooperation,” adding, “We poured our soul into making APEC a success.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY YOON SUNG-MIN [[email protected]]