Hello readers! I hope everybody is having a great summer~
Guess what? On June 20th I visited grand and luxurious Chosun Hotel. Why? Because a forum on policy finance sponsored by the Financial Services Commission (FSC) took place at the hotel. Main theme of this forum was “How to reform policy finance structure”. The forum started with our FSC vice chairman, Jeong Chan-woo’s congratulatory speech. He said that corporate finance institutions should try to reduce financial gray areas and assist private finance companies by minimizing the market conflicts. He also emphasized the importance of supporting foreign projects and expanding interactions with government institutions to better support the financial needs from consumers.
The forum consisted of two main sections. While the first section focused on the restructuring of effective politic finance, the latter one concentrated on showing what corporations actually expect from this restructuring.
The economic professor at Seogang University, Nam Joo-ha, opened up the first session with his presentation about how to restructure the politic finance system. He argued that the policy finance should be reinforced in order to prevent the economic crisis like subprime mortgage crisis, and market conflicts and overlapping role division between diverse financial institutions should be eliminated for the long-term financial development.
According to professor Nam, division of the policy finance structure into the domestic industry, foreign industry, and a sector focused on small and medium sized firms should serve as an effective way to strengthen the policy finance. He mainly analyzed the domestic industry and provided three possible scenarios which have both positive and negative sides. To put it briefly, these scenarios included incorporation of the Korean Finance Corporation into the Korea Development Bank as a subsidiary company, integration of the Korea development Bank and Korea Finance Corporation while maintaining the holding company, and integration of the Korea Development Bank and Korea Finance Corporation with disposal of Daewoo Securities.
After the presentation, other panel members expressed their personal opinions about professor Nam’s suggestion. Even though they agreed that institutions’ overlapped roles and market conflicts should be reduced, each panel members had different opinions about the specific solutions with different aspects. The heated discussions between panel members showed how much controversial and complicating this issue is.
Many audiences left the forum after the first session, but the second session also contained interesting and meaningful ideas. The second session began with very fundamental aspect of this forum. Ha Beung-gi, the senior researcher at the Korea Institute for Industrial Economics and Trade, explained that “policy finance works as a safety net to supplement the market failure and support foreign investment in the midst of financial crisis.” According to the statistics he provided, Korea recorded highest degree of dependency on foreign trade among G20 countries. Thus, without policy finance support, private finance alone cannot meet the demand of increased needs from corporations in the globalized society which makes the in-depth discussion like this very crucial.
After brief explanation about what the policy finance is, Jeong Chang-gu, and Cheul- Gue, who are in foreign construction and resources associations, spoke on behalf of corporations’ perspectives. They spoke out their honest opinions which surprised me. While government bodies and professionals from academia were mainly focusing on the improvement of structure, the companies in the industry cared little for the process and discussions. They were only interested in the consequences and increased benefits. They actually said that “for consumers, it is actually better to have more steps and overlaps because it increases our chances of getting financial supports.” They added that the corporations actually expect a policy finance structure which allows them to get more support easily according to their stages of growth. The second session showed that many parties were involved in this change, and while it is also important to consider efficiency and process, the ultimate focus should be on the consumers who will be actually influenced by the change.
For me, it was the first time to attend such a large-scale forum with many reporters and photographers from diverse broadcasting stations. From this forum, I could see that many organizations including the FSC are trying to come up with better ways to benefit the people and industries. Even though very active public discussions were limited due to time constrain, I hope that all the opinions shared in the forum will contribute to better develop the policy finance structure and upgrade Korea’s economy toward next level.
Soon-Hyang Yoon (firstname.lastname@example.org)