It’s often said in Korea that the manufacturing industry is first-class, whereas the financial industry is a third-class sector

2013-11-28 17:23

Strengthening financial sector

As always, actions speak louder than words 
It’s often said in Korea that the manufacturing industry is first-class, whereas the financial industry is a third-class sector. For this reason, people express doubt if Korea could ever see the birth of a gigantic and well-performing company such as Samsung Electronics emerge in the financial sector.
Given this, the Financial Services Commission’s announcement on Wednesday of a package to boost competitiveness in Korea’s financial industry is a belated but welcome move. It’s right for Shin Je-yoon, the FSC chairman, to say that the prospects for our financial companies will remain dim for as long as they settle for what they have been doing so far, but the most important thing is how to carry out the policies featured in the package.It’s encouraging that the financial regulator has preemptively presented a development blueprint for the financial industry with a vision of making Korea’s financial companies stronger and more influential on the global stage.
It’s equally encouraging that the latest package is more realistic and pragmatic, focusing on providing convenient services to customers, unlike those unveiled in previous administrations.
In fact, empty slogans used to be the norm previously ― during the Roh Moo-hyun administration, Korea was to become a financial hub in Northeast Asia, and during the Lee Myung-bak administration, Korea was to become a central player in the global financial market.
It is little wonder then that our financial sector has regressed over the past decade. Banks have relied heavily on interest margins as usual, and securities companies have lived on commission income.
Incidents of financial fraud have been frequent, while most financial companies that entered overseas markets have failed. During this process, our financial firms have engaged in cut-throat competition to grab the small local market.
The importance of the financial industry shouldn’t be viewed lightly, given that it is destined to support the real economy through an efficient allotment of resources. The financial sector itself has the potential to generate high value added and create jobs. It’s essential that Seoul ought to renovate its financial industry in order to join the ranks of genuinely industrialized countries.
Fortunately, circumstances for the development of the financial industry are positive, given our sophisticated information technologies and competent manpower.
The latest package is focused on deregulation and competition as ways of making local financial firms stronger. Specifically, a proposal to allow financial transfers such as monthly pay when customers change their main bank accounts is a step in the right direction.
Strengthening the competitiveness of financial firms should not be a one-shot event. It requires patience and consistency on the part of policymakers. The reasons why the financial sector has been lagging behind are simple: cumbersome regulations, officials’ intervention and”parachute appointments.’’
The FSC has a stated goal of increasing the value added by the financial sector to 10 percent of the gross domestic product, up from 7 percent at present, within 10 years. To achieve this, it’s imperative to remove these obstacles above all else.