Why Korea Isn’t a Finance Hub Yet

By Michael Breen

If you key the word ``vows" into this newspaper's search engine, it will throw a lot of headlines at you.

Take Tuesday's paper, for example. There, we had President Lee vowing to bring culture to the countryside. I read it because I was curious what it meant. Then on the business pages there was, ``Yoon Vows to Overhaul Financial System." The Yoon in question is the Strategy and Finance Minister, Yoon Jeung-hyun.

At first I couldn't be arsed ― a British idiom that means to be significantly demotivated ― to read that one. I am sure many other readers felt the same. But then I became curious about this reaction. The subject is important, so why wasn't I willing to spend 30 seconds reading about it?

First, the newspaper signaled the story as unimportant. Consider. When the government of a major economy announces an intention to overhaul the entire financial system, you would think it would be front page news and backed by a story showing reaction from the market and perhaps, a day or two later, some columns or editorial comment. In fact, you'd think the president himself would announce it, or at least make sure it gets full attention by saving his concerts-for-the-villages plan for the next day's paper.

But this one was slipped in with other stories. Why? The clue lies in the word ``vows." It is code. It actually means ``tells his audience what it wants to hear" and, at other times, ``throws a bone to critics who might claim he's doing nothing." Nothing? What? Excuse me while I take a break from overhauling the entire financial system to mop my fevered brow.

If reporters were doing their job, you wouldn't see this word, because they would not let government officials get away with it. They do because news reporting in general remains over-dependent on government announcements.

In this case, the actual story was that the finance minister gave a speech to the annual meeting of the International Investment Funds Association in which he said the government would "make every effort" to overhaul the financial system through market-oriented restructuring to turn Korea into a financial powerhouse in the post crisis-era.

The reason it was not on the front page was because the actual news value was minimal. The headline should have been, ``Finance minister tells foreigners same old thing that he thinks they want to hear."

Actually, people in the finance industry ― foreign and Korean ― want to hear substance. They only want to hear about general intentions if they are genuine. Those familiar with Korea are rather fed up with speeches by regulators and policymakers of the last 10 years about what Korea needs to do to be a financial hub. Why keep talking about it? Why not just do it?

The habit of talking about intentions rather than actions is widespread. It is especially frustrating now with regard to financial policy because Korea is for the first time in a position to be a global ``thought leader" on the subject. Korea will soon step into a leadership role in the G20 gathering of top nations. This comes at a time when the big economies are still reeling from the global crisis, still wondering what exactly caused it, and questioning the assumptions behind the regulations and practice.

Korean leaders need to contribute to this global debate. They are perfectly capable of doing so. Korean government officials are very brilliant people. Several years ago, an American ambassador here was fond of telling visitors that there were more officials in the Korean government with Ph.D.s from U.S. universities than there were in the American government itself (because smart Americans don't go into the bureaucracy).

But, collectively, the bureaucratic culture reduces this smartness to a low common level that is characterized by caution and intellectual laziness. It needs to change and one place to start is to stop ``vowing."

Michael Breen is an author, former foreign correspondent and the chairman of Insight Communications, a public relations consulting company. He can be reached at mike.breen@insightcomms.com.