The Korean Government's Financial Hub Strategy
* Please refer to the attached above for a full text.
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Introduction
Good afternoon, ladies and gentlemen.
It is a great pleasure to be with you today.
Let me first thank the Financial Times for arranging this wonderful conference.
It is truly a great honor to participate in this prestigious forum with such distinguished experts from the financial market both home and abroad.
I hope this conference will serve as a wonderful venue for sharing creative ideas and strategies among market participants.
I believe you had very dynamic discussions on a number of issues regarding financial hub throughout the three sessions today.
I'd like to talk about where we are now and where we are going¡¦ in pursuing our Northeast Asian financial hub strategy.
Major Policy Initiatives for a Financial Hub
Since the official announcement of the Financial Hub Strategy at the end of 2003, the Korean government has implemented a number of policies to develop Korea into a Northeast Asian Financial Hub.
We want the financial sector to serve as a driving force behind growth, rather than to play a supplementary role of supporting growth in the real sector.
As you may know, the vision we aspire to is a niche financial hub with a focus on the asset management industry.
We do not expect to achieve this goal overnight. But we are making meaningful progress to make our vision a reality.
We have been working closely with the financial industry to improve our regulation system, bring greater liquidity and depth to our financial market and sharpen the competitiveness of financial institutions.
Now, let me elaborate on our major policy direction.
(1) Improving the Asset Management Business-Related Regulatory System
Our first area of focus is to make our regulatory system more market friendly.
We are continuously improving our asset management and capital market-related regulations to let innovation thrive and market forces work more efficiently.
A cornerstone of this effort is the introduction of a 'Consolidated Capital Market Act' that will combine existing asset management, securities and futures regulations.
In February, we released the draft of this Act and plan to submit it to the National Assembly within this year.
With the passage of this Act, the government aims to eliminate more than one third of around 300 capital market related regulations except those for investor protection.
The proposed Act would bring many benefits:
First of all, it will enable the establishment of so-called 'Financial Investment Companies,' which can engage in all capital market related businesses including securities, futures, asset management and trust.
This will facilitate the restructuring of the capital market and enable the emergence of advanced investment banks.
The regulatory regime will be shifted from a positive-list to a negative-list system.
Market participants will be allowed to develop any kind of investment instrument and investment business, unless specifically prohibited in the regulations.
In addition, investor protection will be differentiated based on the level of sophistication of the investors and the risk level of the investment instruments.
In line with these efforts, the government is also improving the overall regulatory framework to make it more market-friendly.
Last year, 639 regulations under the 40 finance-related acts were all registered in the database for the deregulation process.
The government will enhance the efficiency of the system with regular reviews on the regulations registered in the database through joint public-private task forces.
(2) Foreign Exchange Liberalization
The second area of interest is the foreign exchange market.
The government is supporting the international business of financial institutions by actively liberalizing foreign exchange transactions.
Starting this year, the remaining capital transactions, which needed prior approval under the Foreign Exchange Transaction Act, were fully liberalized.
As a result, our OECD capital movement liberalization ratio jumped from 59.4% to 85.1%.
Furthermore, we are considering ways to accelerate the time frame of full foreign exchange liberalization, which is currently slated for 2011.
We are also studying measures for gradual internationalization of the Korean Won, which is the last stage of our foreign exchange liberalization plan.
For example, last week we eliminated restrictions on the Korean Won exchange business of foreign banks or currency exchange houses abroad.
(3) Advancing Infrastructure of Capital Market
Our third initiative is to expand the liquidity and depth of our capital market.
To create a more investor-friendly environment, we launched the Korea Exchange, which consolidated the stock exchange, futures exchange and the KOSDAQ in 2005.
The Korea Exchange will reinforce its strategic alliance with overseas Exchanges so as to provide a more globalized trading environment.
Meanwhile, Korea Exchange will further its efforts to list foreign companies.
As for the bond market, we are offering longer-term investment instruments by increasing the issuance of longer-term treasury bonds and mortgage-backed securities.
This year, in particular, we started to issue 20-year- treasury bonds to set up a longer term benchmark yield curve.
Furthermore, we encourage global players to participate more in our bond market. To facilitate this, we are bringing our bond issuance procedures in line with international standards.
(4) Korea Investment Corporation (KIC)
Ladies and Gentlemen,
Such measures to improve our financial system will provide us with a firm foundation to further develop the asset management industry.
However, we also need a catalyst to spark the growth of the industry and thus realize our vision of a financial hub more quickly.
That is why we established KIC - the Korea Investment Corporation - in 2005.
KIC is a special investment vehicle to manage part of Korea's foreign exchange reserves.
KIC's management team - the CEO and CIO have already been appointed.
KIC will manage about 20 billion USD and it is likely to start operation in the second half of this year, when staffing and the establishment of its IT systems are complete.
KIC is conducive to both local and global players.
When KIC establishes itself as a world-class asset management company in the near future, we expect its accumulated know-how to be transferred to many domestic financial institutions.
And KIC will generate globally competitive financial professionals of its own who will lead our financial industry.
KIC will also offer vast opportunities to the global players of the international financial market.
In the beginning, it will place a large part of its funds with private asset management companies rather than manage funds in-house.
In selecting outside managers, one of the most important criteria will be their commitment to Korea's financial market.
(5) Nurturing Qualified Professionals
Our last strategy is developing human capital, which lies at the heart of all major issues of the financial sector.
To nurture qualified professionals who will lead our financial sector, we opened a graduate school specialized in finance within the Korea Advanced Institute of Science and Technology in March.
This school will provide education to 100 participants in its two-year MBA program and 100 participants in its six- month financial expert training program each year.
Our efforts do not stop there.
A network center for financial education will be established within the Korea Institute of Finance in the first half of this year.
This center will proactively identify training demands in critical and specialized areas, and draw up mid and long-term plans to nurture financial experts to meet the demands in the market.
Positive Feedback from the Market
So far, the market seems to have recognized and responded positively to our efforts.
Along with the strong stock market, the size of total assets under management is continuing to increase.
The international financial community is also paying close attention to us.
More and more global players such as Fidelity and Prudential Asset Management are expanding their businesses in our market.
In particular, Prudential established its Asian base in Korea and signed an MOU with KIC for business cooperation.
All of these achievements are significant progress, showing that Korea has the true potential to grow into a financial hub in Northeast Asia.
Further Globalization of the Korean Economy
Ladies and gentlemen,
I believe the financial hub strategy must go hand in hand with further opening of the market and our efforts to attract more foreign investors.
As participants in the Korean economy, foreign investors are all critical to the strength and dynamism of our economy.
They contribute to economic growth, introduce advanced technologies & know-how, and create jobs in Korea.
Recently, some investors have mistakenly suggested that we are pursuing anti-foreign investment policies.
Quite to the contrary, I can say with full confidence the government is committed to providing a level playing field for all companies regardless of nationality.
We also protect lawful profits of foreign companies, since these gains are well-deserved fruits of risk-taking activities.
There are plenty of examples to demonstrate that the Korean government continues to push ahead with attracting more foreign investment.
We launched 'Invest Korea', an FDI promotion agency, in 2003. Since then it has provided assistance to foreign investors through all stages of the FDI process, from initial contact to establishment of the company.
We are also putting in extra effort to attract financial institutions, which is essential to realize our vision.
To support foreign financial institutions trying to enter the Korean market, a 'Financial Hub Korea' team has been created within the Ministry of Finance and Economy.
This team is providing one-stop services to foreign financial institutions, and will serve as a place for them to voice their opinions.
Moreover, the start of Korea-US FTA negotiations was officially announced in February and the first round of negotiation will be held on the fifth of June.
The FTA with the U.S. is a supreme symbol of our strong commitment to further globalization and will bring about many positive results:
First, the Korea-US FTA will expand trade and investment with the US - one of our largest economic partners.
Second, we can further advance Korea's industrial structure.
In particular, the FTA will contribute to diversifying our growth engines by enhancing the competitiveness of the service sector.
Third, the Korea-US FTA will help Korea improve social systems and institutions to bring them in line with global standards.
And finally, the Korea-US FTA will add momentum to Korea's FTA negotiations with other economies, such as Japan, Canada, and ASEAN, and thus strengthen Korea's interconnections with the world's major economies.
Closing
Distinguished guests,
The Korean government is committed to the vision of a leading financial hub, which is competitive, fosters innovation, and keeps regulatory standards high.
We have made steady progress toward this goal and will continue to do so.
We will never become complacent and satisfied with the status quo, or else we will be overtaken and left behind.
But it takes more than just the effort of the government to fully realize the vision of the financial hub.
It is the energy and responsiveness of the private sector that will ultimately determine how fast and how far we will proceed.
Therefore, the government and market participants from home and abroad will need to work together to realize the vision of a more dynamic, competitive and vibrant financial system.
I believe discussions of this conference will be of great help for the government to formulate more effective and market-friendly financial hub strategy.
I promise you that the Korean government will sincerely accommodate your valuable insights and advice into our policy agenda.
Thank you.
이 보도자료는 Ministry of Strategy and Finance가(이) 작성해 뉴스와이어 서비스를 통해 배포한 뉴스입니다.
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2008년 10월 6일 16:30
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2008년 8월 6일 17:21