-Written by Jaehyun Kim
On Tuesday, November 12, the Financial Services Commission held an open seminar on technology rating and finance at the Korean Federation of Science and Technology (KOFST). The seminar was designed to facilitate technology finance and establish an objective technology-rating system that enables provision of effective financial support to technology firms which are crucial in realizing ‘creative economy.’ FSC Chairman Shin Je-yoon participated in the seminar and listened to various opinions regarding the technology rating and finance, problems, and solutions to vitalize the market. Participants from technology-rating agencies, credit-rating agencies, and financial industry gave their presentations on the issue. During the discussion and Q&A sessions all participants were given opportunities to share ideas to devise constructive solutions on the issue.
To mention several presenters and their proposals in the seminar, Dr. Im Hyung-jun of the Korea Institute of Finance (KIF) discussed the current situation of technology finance and improvement plans. In the presentation he said that there is a limit when providing loan to technology firms largely due to information asymmetry regarding technology, high risks of future cash flows, and the conservative monetary supply of banks. Thus, in order to vitalize technology finance it is crucial for banks to thoroughly examine technology-rating agencies and share the related expenses with them to bring down the cost of technology rating.
Another participant who shared ideas was Dr. Ryu Tae-won of the Korea Institute of Intellectual Property. According to Dr. Ryu, there is an urgent need to introduce technology rating system which would allow reduction of assessment costs. He emphasized that financial institutions, rating agencies, and DB controlling agencies, therefore, should develop a compatible standard model and an open database system.
Followed by the proposals of the experts from various areas, the FSC chairman gave a speech on the issue. There have been a number of obstacles in realizing ‘creative economy’ including problems of rating technology and ideas which must be addressed in order for the current policies to generate fruitful results, said the chairman. According to him, the problem rises from the significant gap between subjective and objective views on knowledge and technology which are mostly caused by information asymmetry and uncertainty. He hoped that minimizing the gap through introducing authorized and objective technological assessment method would enable ample monetary supply to firms with technological advantage. Doing so would eventually provide a new break-through which establishes new healthy ecosystem for startups.
In the end, chairman of the FSC announced that the focus of future policies would be on nurturing Technology Bureaus(TB) which produce, manage, and accumulate technology and information. Also, the focus would be on the establishment of professional technology-rating agencies that provide customized information on technology. Lastly, he mentioned that it is necessary to find a way to encourage financial institutions to effectively make use of the information when making decisions regarding credit and investment. Finally, Chairman Shin said that all of the ideas and opinions shared among participants in the seminar will be reflected and applied when devising measures to establish technology-rating system in a bid to facilitate technology finance which the FSC plans to announce in 2013.
Jaehyun Kim (firstname.lastname@example.org)