South Korea is looking to create a new financial centre outside the capital Seoul, as the government moves to ease over-concentration in the greater metropolitan area, which is home to more than half the country’s population. The plan is part of a broader effort to balance national development and reduce the strain on Seoul.
The government has identified Jeonbuk, a province about 200 kilometres south of Seoul, as a potential candidate for the new financial hub. Jeonbuk is already home to the National Pension Service, which manages more than US$1 trillion.
At a committee meeting, government officials and financial industry leaders discussed a plan to develop a new financial hub, including how to evaluate whether Jeonbuk was a suitable candidate. The Financial Services Commission said in a statement that the committee will also “actively support” the overseas expansion of local financial institutions and boost communication with global financial firms operating in South Korea.
The drive to establish a new financial hub mirrors steps taken by other countries to reduce the concentration of business and population in their capital cities. For example, Japanese lawmakers approved a bill in July to designate one or more regions as a backup if Tokyo is incapacitated by a disaster.
China has also called for greater efforts to develop the metropolis of Xiongan near Beijing to serve as a release valve for the crowded capital. In India, authorities are pushing for further development of GIFT City, a financial hub that’s several hours away by air from the traffic-choked streets of Mumbai.
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According to the Global Financial Centres Index 39, Seoul ranked eighth and Busan the 23rd financial hub globally in March this year. The government has announced plans to build a massive new chip hub in the far south of the country, in addition to the new financial hub.
A panel made up of officials, academics, and industry experts will evaluate Jeonbuk’s potential to grow into a global financial hub and its ability to attract domestic and international financial institutions. The government will “encourage financial market innovation, establish infrastructure that complies with global standards, and vitalise the capital market to be more foreign investor friendly”, to support a solid financial hub.
South Korea is not alone in seeking to create a more balanced economy. By establishing a new financial hub, the government aims to reduce the strain on Seoul.
The committee will continue to evaluate Jeonbuk’s potential and develop a plan to establish the new financial hub. They will encourage financial market innovation and establish infrastructure that complies with global standards, which will be important in attracting domestic and international financial institutions to the new hub.
The National Pension Service, which relocated its headquarters to Jeonbuk in 2015, will likely play a key role in the development of the new financial hub.
