Park Administration's Blueprint for the Financial Industry
(Interview with Financial Services Commission Chairman Shin Je-Yoon)
The Financial Services Commission (FSC) has recently unveiled plans to strengthen the
competitiveness of the financial industry. What are the motivations behind the recent measures?
Until now, the role of Korea’s financial industry was mainly to provide funds to boost the
competitiveness of corporations. Although it is undeniable that finance has played a major
role in the growth of today’s multinational firms, we should now recognize that Korea’s
economic structure is changing. Korea is no longer at the stage where capital and labor
are the only ingredients for economic growth. It has become imperative to contemplate
on the financial sector’s role in an era where ideas, imagination and technology converge.
We realized that efforts are needed to boost the competitiveness of the financial industry
itself. We are planning on bringing on a change of paradigm in the financial industry.
Feasibility and public opinion have been emphasized in the measures. Personally, how realistic
do you think they are?
I would never adopt a plan that was not feasible. As a civil servant in the past, I had
often participated in long-term planning missions like this, but looking back, many of
them were too idealistic. Academic opinion was heavily reflected in those plans, which
made them ideal but unrealistic. This time we talked to those actually working in the
financial industry. As a result, we saw much less of the flamboyant rhetoric of the past,
such as “building an Asian financial hub” or “making a Korean version of Goldman Sachs
within five years.” Also, since situations tend to change all the time due to changes in the
environment, we will continue to make adjustments to our plans, instead of confining
ourselves to the original plans.
The latest measures are dubbed the 10-10 Value-Up Plan, and contain three missions. What does
10-10 Value Up mean, and what is the significance of the three missions?
Although we tried to emphasize feasibility and refrain from fancy slogans, we wanted to
express our main vision in one phrase. Thus we came up with the 10-10 Value-Up Plan,
which refers to our aim to raise the financial sector’s added-value up to 10 percent of
GDP over the next 10 years.
The public tends to regard the role of finance simply as lending money when needed
and keeping people’s assets safe, but I hope Korea’s financial sector will develop into an
independent industry that creates jobs and makes money. In light of this, the three main
missions, labeled the 3C’s, consist of competition―making the financial pie larger through
competition and deregulation, convergence―optimizing efficiency by developing the
real economy and financial markets at the same time, and consumer protection.
To the Korean public, the goal of raising the financial sector’s share of the nation’s GDP to 10
percent within 10 years does not seem that ambitious, as it is currently 7 percent.
That is why I want to emphasize that our vision is a modest one, and that if we move stepby-
step we will eventually create a Korean Goldman Sachs or become the financial hub
of Northeast Asia. The goal of raising the share of the financial industry’s added-value by
3 percentage points may seem small, but considering that Korea’s GDP now amounts to
1,300 trillion won, 3 percentage points is not as small as it seems. We should also think
of the fact that many high-quality jobs will be created in the financial sector. We expect
many jobs to be created in this administration as well as the next.
What are the key points of the latest measures?
Deregulation is at the core of our plans. We are also focused on private equity funds.
Considering our historical background, private equity funds can be ideal for our nation.
Durae (a system in which farmers help each other out during farming season) or Gye (a
system in which members chip in small amounts of money into a fund and later take turns
receiving lump sums) are part of our tradition, and are similar to today’s private equity
funds or hedge funds. The public tends to show an adverse reaction to private equity
funds and hedge funds, especially since they were at the center of controversy during the
financial crisis. Also, there is the view that talks regarding private equity funds and hedge
funds are intended to favor big businesses. However, such concerns are unfounded.
We are planning to foster the private equity sector based on the community spirit and
traditional values of Durae and Gye. Critics are concerned that deregulation will have
bad consequences, but our aim is to ease regulations that restrict the business practices
of financial firms, while reinforcing consumer protection and reining in conglomerates’
concentration of wealth.
The original version of this interview appears in the January 2014 issue of Narakyungje, a monthly
magazine on economic policies published by the KDI.