Value context and insight. lkm@koreatimes.co.kr
Jeonju fails to win financial hub status
National Pension Service headquarters / Korea Times file
By Lee Kyung-min
By Lee Kyung-min
Jeonju, North Jeolla Province, has failed to meet key criteria to become the country's third financial center after Seoul and Busan, the government said Friday.
The initiative pushed by the provincial government, also a key election pledge of President Moon Jae-in, was premised on the much-hyped synergy effect with the National Pension Service with 65 billion won ($57 million), the third-largest public pension fund in the world.
The NPS relocated from Seoul to Jeonju in 2015 to help balance growth between the capital and other cities.
A 21-member committee under the Financial Services Commission (FSC) said the now-suspended deliberation may be resumed upon submission of specific plans provided by the provincial government on how to become a city specializing in pension fund management and agricultural science.
However, the announcement has essentially scrapped the plan given another major requirement includes improvement in the overall infrastructure development and further urbanization, a process that cannot be achieved soon.
The committee said this was needed to make global financial services firms voluntarily move and set up branches there.
The conclusion followed a two-week review of a research paper by the Korea Institute of Finance (KIF), which assessed the economic viability of Jeonju.
“While the local financial industry has seen a substantial growth and improvement of overall relevant infrastructure over the past ten years, the consensus is that the plan lacks both in global recognition and competitiveness,” the committee said in a statement.
“Determinants of designating the city as the third financial center will include whether it can provide advantages distinguished from the two other cities, and whether it has a business model based on sustainable growth.”
Economists said increasing the number of financial cities in and of itself has a fundamental shortcoming because it hinders the concentration of key financial functions.
“A high concentration of competent human resources and infrastructure are key requirements for any city to become a financial hub,” said Sung Tae-yoon, an economist at Yonsei University.
“The improvement in such areas will not materialize any time soon, which makes the initiative rather difficult to achieve.”
Other than the NPS, the city has no discernable qualities to attract global financial services firms let alone domestic ones, according to an industry source who refused to be identified.
“Many top-performing workers have left the NPS for other firms over the past few years, due mostly to low accessibility to global asset managers compared to Seoul. The number is on a steady increase,” the official said.
“The city practically has nothing to offer and the degree of infrastructure development falls far behind global standards to become the financial hub. It will take much time for the city to even be considered eligible for the designation.”