South Korea's state-run development bank and a Japanese financial firm have newly launched an investment fund to boost up bilateral business ties in the industrial parts sector, the government said on Monday.

The fund, established through a 50-50 investment by the Korea Development Bank and Japan's CSK Venture Capital, will be used for South Korean companies as well as Japanese companies operating in the country, the nation's economy ministry said.

Although the memorandum of understanding (MOU) between the two companies does not contain detailed information on the exact size of the investment, it may reach up to US$100 million, according to an official of the ministry.

The fund is expected to facilitate investment by foreign companies and to boost government efforts to create an industrial park for Japanese businesses, the official said.

The deal is part of South Korea's efforts to reduce trade deficit it has marked with Japan, local media said.

South Korea's trade deficit with Japan topped US$32.7 billion in 2008, mainly due to the country's heavy reliance on Japan's key parts, components and manufacturing machinery.

CSK is one of Japan's top three venture capitals, with operating funds around US$300 million, and has been operating as a corporate consulting and investment support company in South Korea since 2005.

(Xinhua News Agency April 27, 2009)