With the uncertainty surrounding the two-month long impeachment process of President Roh Moo Hyun now finally resolved, and the president firmly back in the saddle, South Korea is keen to push ahead with more financial reform and, in particular, focus on asset management.
Speaking to The Banker, Mr Duck-Soo Han, Minister for Government Policy Coordination, noted that Korea had $400bn in short-term capital looking for investment and given the huge foreign exchange reserves in the region (South Korea has more than $160bn) north-east Asia was awash with funds.
As part of the country’s reforms Mr Han is planning to introduce a law this month to establish a $20bn Korean investment company to develop the local market and utilise the huge domestic liquidity. To be called the Korea Investment Company, Mr Han said the new company will be modelled on Singapore’s government-owned investment holding company, Temasek, which has stakes in a variety of companies. He noted that a portion of the country’s large reserves, held in US Treasury bonds, would be taken for the $20bn new company.
Mr Han emphasised that all the countries in the region have large funds and are looking for opportunities to invest; Korea is keen to develop its financial sector as a hub for the region and is focusing on building its asset management capabilities. He added that if this new company proves successful, then the country’s national pension scheme would place funds there.
The government is also anxious to develop private equity funds to create a broader financial sector. “We have a lot of good [non-financial] companies that need financial back-up, there is a lot of money around that needs proper investment and good asset management.” Mr Han adds that Korea is now on course to achieve a “satisfactory” 5% growth this year and a potential 6% growth in 2005 with the government’s privatisation process set to continue.
