Contradicting Move
Recently, more and more South Korean financial companies are expanding their business abroad, including Southeast Asia. In particular, the Moon Jae-in administration has been pursuing “New Southern Policy” to strengthen economic and diplomatic cooperation with ASEAN member countries. Accordingly, there has been a noticeable increase in the number of Korean financial firms seeking to push into the Southeast Asian market.
However, the Financial Supervisory Service (FSS) has been downsizing its overseas offices that are supposed to support financial firms’ overseas expansion. The latest move contradicts the government’s policy. It is time for the Korean financial regulator to maintain close ties with the financial authorities of the countries where Korean financial firms have advanced.
According to investment banking (IB) industry sources on August 2, the FSS is to close down next month its office in Hong Kong, which is designed to help domestic financial companies enter the global market. It has also scrapped a plan to open an office in Singapore, which is considered a global financial hub.
Currently, the FSS employs 20 workers in eight overseas offices to help financial firms go global, such as New York and Washington (D.C.) in the United States, London in the United Kingdom, Frankfurt in Germany, Tokyo in Japan, Hanoi in Vietnam and Beijing in China as well as Hong Kong. However, it is now uncertain whether these office will continue to exist. This is because the Board of Audit and Inspection (BAI) pointed out that the FSS’ overseas offices are not so helpful but are wasting the national budgets.
The BAI analyzed business performance of the FSS’ eight overseas offices in September last year. It said that most of information could be gathered via the Internet in South Korea but the FSS is wasting 7.8 billion won (US$6.96 million) a year on its 20 employees in eight offices overseas.
In this regard, an official from the FSS said, “The BAI evaluated the value of the FSS’ overseas offices based on their report performance alone but the overseas offices are not only writing up reports but also are working closely with local regulators to keep up the latest regulations and systems in the local markets in advance and are providing consulting services to domestic financial companies. Recently, a considerable number of domestic financial firms are seeking to enter the Southeast Asian market but the fact that there are no support organization in Hong Kong and Singapore, which are two largest financial hubs in the world, is a great loss to the country.”
According to the FSS, the number of overseas branch offices run by domestic financial companies increased 20 percent from 359 in 2011 to 431 at the end of last year. About 70 percent, or 299, of 431 branch offices were concentrated in the Asian region. China ranked first with 64, followed by Vietnam with 50, Hong Kong with 35 and Indonesia with 24.