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KoFC seeks to become savior for SMEs

By Kang Seung-woo Staff reporter The Korea Finance Corporation (KoFC) was spun off from the Korea Development Bank (KDB) last October, as the state-run lender's first step toward privatization. But the newly-established agency assumed the public-financing functions of the KDB with dedication, seeking to contribute to the national economy and open a new dimension of policy-based financing in Korea. Under the vision, the KoFC, presided over by Ryu Jae-han, helps small- and medium-sized enterprises (SME) to raise money easily, and supplies and manages funds required for the growth of the economy, such as the development of regions, the extension of social infrastructure, the development of new growth engine industries, the stabilization of financial markets, and the facilitation of sustainable growth. The KoFC aims to foster the growth of SMEs through diverse means stipulated in its charter, and represent those with high growth potential with intermediary lending institutions. In its quest to enhance the nation's growth potential, the KoFC provides financial support for

From ‘Korea discount’ to Korea premium

Euh Yoon-dae Chairman, Presidential Council on National Branding South Korea has enjoyed greatly enhanced international status in recent years. The country's raised profile was perhaps epitomized when U.S. Treasury Secretary Timothy Geithner went out of his way to greet and shake hands with Finance Minister Yoon Jeung-hyun during the meeting of G-20 finance leaders in Washington in April. Obviously, South Korea has come a long way since Yi Jun, an emissary of Korean Emperor Gojong, was declined from observing the proceedings of the Second Peace Conference at The Hague, Netherlands, in 1907. For most of the 20th century, South Korea had never been truly included in the core of global discussions. So the country being picked as the 2010 chair country of the G-20 certainly qualifies as a dramatic turn around. Seoul was determined as the venue for the November G-20 leaders meeting during the third summit in Pittsburgh in September last year. It was also during the Pittsburg meeting when the world leaders declared that the G-20 will replace G-8 as the permanent council for in

Lessons from Korea’s financial crisis

By Jeffrey Jones Former AMCAM Chairman The Asian financial crisis of 1998, which started in Thailand and quickly spread throughout Asia, engulfed Korea with an overwhelming losses and a sense of despair. The excessive leverage brought about by control of the financial markets by the political apparatus resulted in tremendous losses to the financial system and a need for deep and broad restructuring of corporate Korea. The Korean financial system was on the brink of absolute failure. The International Monetary Fund (IMF) was asked to provide a bailout package as Korea had run out of foreign exchange and was facing a moratorium on remittances. The bailout came with tough conditions and advice from the experts at the IMF and World Bank, among others, on how to restructure the Korean economy. This was a bitter pill for Korea to swallow as it meant following market principles of transparency in respect of the economy and the end of government controlled economy and directed lending to the large groups. The advice was clear. No company was too big to fail, and the financial

Going back to basics key to preventing crisis

By Chin Dong-soo FSC Chairman Over the past decade, the global economy has enjoyed an unprecedented boom period marked by financial innovation, low inflation and rapid growth. However, global imbalances and persistently low-interest rates led to rapid credit expansion and overleveraging, which subsequently created vulnerability in the financial system. In addition, asymmetric compensation schemes and misaligned governance encouraged financial institutions to take excessive risks. Unfortunately, financial supervisors and regulations around the world fell short of delivering effective responses to such changes in the financial market. Indeed, the global financial crisis served as a wake-up call for all of us; to deliberate on the future of the global financial system and to reflect on what efforts need to be made to revamp the current system. Korea's experience The financial crisis that hit Korea and other Asian countries in the late 90's differs from the recent global crisis in terms of scope, depth and characteristics. However, the underlying issues are quite familiar

Not returning to foreign exchange band

Finance minister defends floating FX system despite growing concern on volatility By Cho Jin-seo Staff reporter Minister of Strategy and Finance Yoon Jeung-hyun has made it clear that Korea will continue to float its currency on the open market even though there is growing skepticism on the safety of the country's currency exchange system in the increasingly volatile international financial market. Instead, Yoon, in an e-mail interview with The Korea Times this week, said the government will adopt other measures, such as a special bank levy, to control the rapid cross-border flow of money in and out of Korea, which has been wildly shaking the won-dollar exchange rate. "Abolishing the free-floating foreign exchange system is not an option for the government," Yoon said. The currency floating system, he said, was efficient in absorbing external shocks and controlling risk on the market. Also, considering the size of the economy and the country's international reputation, he said it was inevitable for the government to stick to the current system. "We maintain our pol

Korea has competitive support system for small firms

By Lee Jeong-hee Researcher of Korea Institute of Public Administration Small-and medium-sized enterprises (SMEs) have made a remarkable contribution to promoting industrial productivity and leading economic growth. Small businesses and their entrepreneurship have been a primary source in providing jobs and powering the economy. Korea is a typical case in point in this matter. Small-and-medium sized enterprises provide more than 75 percent of employment and 50 percent of GNP and economic value in Korea. SMEs account for more than 35 percent of exports and power more half of economic growth. That is to say, they are one of the major forces behind the strong economy. SMEs in Korea, what are they? What roles did they play in the course of rapid economic development in Korea? How did entrepreneurs of startups manage the sustainable growth of their companies? What kind of support did they get from the public and government? These are some significant questions, answers to which are crucial in understanding the business, innovations and entrepreneurship of SMEs in Korea. Sma

G-20 to find middle ground on bank levy

Seoul to speak up for IMF reform at Busan meeting

Finance ministers need to pull themselves together against a pile of headaches ahead By Cho Jin-seo Staff reporter After a tough ride on an airplane through heavy turbulence, passengers often give warm applause to their pilots and enjoy a certain feeling of caramaderie among themselves. "We have made it through together!" they may think. It is the comradeship that only a life-and-death situation can give. Over the course of the past two years, the finance ministers and the central bankers who will gather in Busan this week for the G-20 meeting may have developed a similar fraternity. Except for those who were recently appointed to their positions, they have together engaged in the matter of saving the world from the ugly financial turmoil. Also, they themselves were often the target of anger from citizens for not being able to predict, and prevent the crisis. For the first time in world history, the finance ministers and central bankers of Asia, Europe, America, Australia and the Middle East are finding themselves in the same boat. For them, G-20 meetings are becomi

S-Oil Total Lubricants CEO Thierry Gourault, sixth from ...

World faces 8 paradigm shifts in post-crisis era

By Richard Dobbs and Alex Kim The significance of the economic crisis from which the world is beginning to emerge cannot be overstated. We have just witnessed the first global recession since World War II (Exhibit 1). But it would be a mistake for businesses to assume that economic recovery will mean a return to business as usual. CEOs need to understand, and incorporate into their strategy, eight paradigm shifts that together constitute a radical change in the business environment. Some of these shifts result from the global economic crisis; however most predated, but have been accelerated by, the downturn. Debt and deleveraging Cheap borrowing and growing debt levels have underpinned global economic growth for two decades. In the ten years prior to the global downturn, debt levels in many countries grew more than 4 percent faster than GDP. Although historically low interest rates mean that carrying this debt is currently possible, interest rates will rise and governments and households will need to deleverage. Previous crises show that this process can take thr