Busan's plan to lure firms leaving Hong Kong hits snag

Busan International Finance Center / Courtesy of Busan Metropolitan Government

By Park Jae-hyuk

Busan is apparently suffering a setback in its grand scheme of being the next premier financial hub in Asia by attracting multinational banks, asset management companies and venture capital firms leaving Hong Kong.

Although the nation's second-largest city has declared it will carry out a series of aggressive marketing campaigns to attract global financial firms, the control tower for the plan is still facing multiple challenges, according to sources.

They said the Busan International Financial Promotion Agency launched in July to direct the city's financial hub vision could not form the organization as planned, because institutions that had funded its establishment refused to dispatch workers.

As a result, the agency has three employees at this moment ― not including the president. It is looking for additional financial experts in order to increase the number of its workers to 12 by the end of this year and gradually increase the number of staff to 20.

In collaboration with the agency, the Busan Metropolitan Government initially planned to hold a web conference this month to introduce the city to financial firms in Hong Kong. But the event was postponed to August, according to the city government.

Busan also wants to conduct an on-site investor roadshow in Hong Kong and visit companies there, when Hong Kong's travel restrictions are lifted. However, most of Busan's projects regarding its financial hub vision will be unavailable until next year, according to sources, due to the agency's workforce shortage.

A Busan-based civic group has expressed concerns about the agency's President Kim Jong-hwa, a former Bank of Korea deputy governor and the former president of the Korea Financial Telecommunications and Clearings Institute.

“His appointment was decided by a committee comprised of officials from institutions that paid for the agency's establishment, excluding any outside experts,” the Busan Citizen Network for Saving the Economy said in a statement. “The agency's incumbent board also consists of the heads of those institutions.”

A top executive of one of the nation's leading private equity firms told The Korea Times that an expert from the private sector should have led the city's efforts to become the financial hub, instead of the incumbent president who built most of his career at the central bank.

“I am skeptical whether Busan will be able to achieve its goal or not,” he said.

Data compiled by the Financial Supervisory Service showed 64 foreign financial firms have entered the Korean market since the government designated Busan as a financial center here. But none of them opened their offices in Busan, while 62 opened in Seoul and two in Gyeonggi Province.

According to commercial think tank 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 regulatory obstacles to make it attractive.