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| A notice on the Presidential Committee for Balanced National Development's website |
The move comes as governments in Asia seek to attract financial firms possibly leaving Hong Kong amid the unrest following China's introduction of a security law there. The government has assigned the Presidential Committee for Balanced National Development to undertake studies on fostering an Asian financial hub, even though the committee's stated focus has been entirely domestic.
It states on the committee's website that its aim is "to resolve the imbalance among regions and contribute to the equal improvement of people's lives." This was one of President Moon Jae-in's key election pledges, as there is still a heavy concentration in the capital, despite previous decentralization efforts.
President Moon has unveiled plans to relocate public institutions including state-run banks to regional cities as part of these efforts.
While the initiatives for balanced development appear reasonable, it is difficult to fathom how the two projects of balanced development and fostering the nation as a financial hub can be tied together.
The study the presidential committee is seeking to subcontract is aimed at fostering an Asian financial hub "from the perspective of regional development."
It appears the government is seeking grounds for the relocation of financial institutions outside Seoul, under the pretext of making Korea a more competitive financial center.
Some thoughts are that this needs to be backed by some actual rationale. The government in 2009 designated Busan as the country's second financial center after Seoul. It has aimed to make the southern port city a hub focusing on marine finance. A handful of related financial institutions relocated to the city accordingly, including the Korea Exchange.
However, Busan's competitiveness as a financial center has remained lackluster. So has Seoul's.
Experts have pointed out that dispersing financial centers only brings down their overall standard.
The government has sought to create a third financial center in the city of Jeonju in North Jeolla Province, after the National Pension Service (NPS) moved to the city in 2017. The government stated it would put the plan on hold after feasibility studies were completed in March last year, but it appears the Moon administration is exploring prospects once again within the presidential committee.
A crucial issue in relocating financial institutions and building financial centers is securing talented personnel. The NPS lost key personnel when it moved to Jeonju, as did other major institutions that relocated to Busan.
Accessibility issues have also been cited for Busan and Jeonju, not only for Korean nationals but also for foreign businesspeople that visit.
Industry insiders attribute Korea's failure to develop a financial hub to the absence of financial experts in the government. This has resulted in the government using the financial sector as a tool for other means ― namely, regional development.
