Busan capitalizes on HK unrest for financial hub vision

Busan International Finance Center / Courtesy of Busan Metropolitan Government

Seoul careful about taking advantage of political turmoil

By Park Jae-hyuk

Busan has declared it will seek to attract multinational banks, asset management companies and venture capital firms leaving Hong Kong, preempting Seoul which has remained cautious about taking advantage of an escalating political feud there.

The Busan Metropolitan Government said Tuesday that its move comes as Asia's premier financial hub has demonstrated instability amid the COVID-19 pandemic and massive protests against Beijing's promulgation of a national security law, apparently intended to tighten its grip over the “special administrative region.”

The city government said it will conduct an online investor roadshow, Thursday, in collaboration with Z/Yen, a London-based commercial think tank which has over 10,000 clients worldwide.

Busan will hold a web conference in July to introduce itself to financial firms in Hong Kong.

It is also planning to conduct an on-site investor roadshow there and visit companies there in collaboration with the Financial Supervisory Service, when the city's travel restriction is lifted.

In addition, ads for Korea's second-largest city will be put on mobile apps and foreign business news outlets, such as the Economist and Bloomberg, so as to raise global financial companies' awareness of Busan.

“We will definitely achieve a success by promoting our city to global financial companies in Hong Kong,” Busan Acting Mayor Byeon Sung-wan said. “We will do our best to improve our city's status as a financial hub.”

The city government promised it will lend business spaces for free for 25 years, if foreign financial firms move to the Busan International Finance Center (BIFC).

The foreign companies will also be exempt from corporate and income taxes for the first three years and will be able to enjoy an additional 50 percent tax cut if they stay in the city for two more years.

“Our city's merits are maritime finance and derivatives,” a Busan Metropolitan Government official said. “When the Busan Finance Center opens in July and hires marketing and financial experts, we will be able to speed up our efforts to attract maritime financial institutions.”

In contrast, the Seoul Metropolitan Government has yet to announce any plan to attract global financial firms exiting Hong Kong.

A source close to the city government said it is taking a more cautious approach toward this issue, because the international community may consider the capital city's attempt to attract companies in Hong Kong as different from Busan's attempt.

The source said the Seoul Metropolitan Government has sought to attract foreign financial firms without emphasizing their nationality and locations.

“Our city will start offering business spaces on Yeouido from October to foreign financial firms and international organizations,” a Seoul Metropolitan Government official said. “We will also continue to carry out various marketing campaigns for foreign businesses that are considering moving their offices to Seoul from other Asian cities.”

According to Z/Yen's global financial centers index measuring the competitiveness of financial centers, Seoul and Busan ranked 33rd and 51st in March, respectively, among 108 cities worldwide.

Against this backdrop, financial industry officials have predicted Singapore to replace Hong Kong as Asia's premier financial hub, pointing out that Korea still has too many regulations to make it attractive.

Although most experts here admitted the criticism, some of them said Korea can provide global financial firms with new opportunities that are not available in any other Asian countries.

“From a long-term point of view, one of our country's merits is possible economic cooperation between the two Koreas,” Korea Institute of Finance senior research fellow Lee Yoon-sok said. “Although Singapore has already been a financial hub, it lacks new growth engines. Despite the growth of ASEAN nations, the city state will unlikely benefit from its neighbor's development.”

In this regard, the researcher welcomed the Busan Metropolitan Government's recent announcement and called for the Seoul Metropolitan Government to take similar action.