Another Bid to Create Financial Hub
The Financial Services Commission (FSC) finalized on May 17 its fifth basic plan pertaining to the Creation and Development of Financial Hubs Act, which will cover the period of 2020 to 2022.
South Korea’s plan to turn into a Northeast Asian financial hub was initiated in December 2003 by the government coming up with a roadmap. The first basic plan was established in August 2008 and Seoul and Busan were designated as financial centers in January 2009.
The government’s efforts have shown little progress for the past 17 years. Although the aggregate value of the stock market has increased along with foreign investors’ shareholdings, the number of foreign financial companies doing business in South Korea decreased from 166 to 162 and the number of foreign banks in the country fell from 60 to 53 from 2015 to 2019. In addition, the number of foreign financial companies that entered South Korea and domestic financial companies that went abroad fell from 48 to 37 from 2015 to 2017 and then to 24 in 2019.
In this regard, the fifth plan presents promotion of innovation led by the private sector based on aggressive deregulation, infrastructure establishment for the industry’s innovative growth based on more data utilization, and choice and concentration for global competitiveness enhancement. The government’s three specific action plans to achieve the goals are concentrated support for industry segments with comparative advantages, globalization of financial infrastructure, and substantial support for the financial centers.
More specifically, the segments with comparative advantages are related to fintech innovation, asset management market expansion, etc. The roles of pension funds such as the National Pension Service will be expanded so that more active overseas investment can contribute to the growth of the domestic asset management sector and fund-related regulations will be improved for more innovation in the sector.
In addition, the small-sum overseas remittance business will be promoted and external transactions will be better supported for more convenient foreign exchange transactions. Business conditions will be improved to attract foreign financial companies and domestic financial companies’ overseas business will be assisted.
The FSC is planning to prepare the final version of the plan at its general meeting scheduled for May 27 and submit it to the National Assembly in August.