Vision to reality: Yeouido is earmarked to become Asia's leading financial hub

Based on strong economic fundamentals and improving infrastructure, Seoul is gearing up to become a key player in the new global financial paradigm, says Paul Moon, director-general of Seoul's Investment Bureau.

Rapid changes in the global financial environment resulting from the worldwide financial crisis are changing the landscape of financial centres around the world. Questions have been raised over the Western financial system model, while Asia emerges as a new financial force that could dominate financial markets with the leverage of its rapid economic growth and rich human resources. Seoul stands at the centre of the renewed attention on Asia.

Early this year, World Bank senior vice-president Justin Lin expressed the firm conviction that South Korea would recover fastest among the Organisation for Economic Co-operation and Development (OECD) countries. The high expectations were more than fulfilled when South Korea recorded the highest second quarter gross domestic product (GDP) growth rate of 2.3% among OECD members - after being one of the few to register positive GDP growth in the first quarter due to its strong economic fundamentals and crisis management know-how gained from overcoming the Asian financial crisis a decade earlier.

Seoul, the heart of South Korea's finance and economy, is ready to realise its vision of becoming Asia's representative financial hub with strong government commitment and support.

Driving asset management

One of the key components that sustain a financial hub is strong economic fundamentals. The aftermath of the credit crisis showed that emerging financial cities which depended primarily on only financial services were hit hard, while those armed with a solid industrial base and strong real economy remained resilient. As the 15th largest economy in the world, South Korea is renowned for its first-class shipbuilding, semiconductor and IT industries.

The South Korean financial market has achieved remarkable growth over the past decade. According to the 2008 World Federation of Exchanges report, the country ranks fourth in Asia in total value of share trading, third in value of bonds listed in Asia, and first in the world in stock index option volume.

Efforts to advance the country's financial system are also paying off. South Korea enacted the Capital Market and Financial Investment Business Act in February 2009 to enhance efficiency by bringing down the walls between different financial businesses and to encourage companies to introduce diverse financial products. Incorporation into the Developed Market Index of the Financial Times Stock Exchange (FTSE) in September meant the embrace of South Korea by the world for its advanced financial sector and stability.

As one of its multi-pronged approaches to creating a financial hub, Seoul is actively promoting the asset management industry. Seven big-name global asset management companies, including JPMorgan Asset Management and Black Rock Alliance Bernstein, have made inroads into South Korea over the past few years.

The world's fund markets shrank in the first quarter of 2009 by $766bn (-4%) from the previous quarter, reeling from the fall of the global stock market. During that same period, however, the fund market in South Korea grew by $7.3bn (3.3%) due to the continued inflow of capital, making it the world's 14th largest market.

With a birth rate that has hit a record low, South Korea is the most rapidly ageing country among OECD members. Its retirement pension plan, launched at the end of 2005, is snowballing in number of members and overall size. As the government plans to grant corporate tax cuts on retirement pensions starting in 2011, the demand for pension funds is expected to grow even further.

The steep rise in the number of high net worth individuals (HNWI) is also encouraging. In the 2008 World Wealth Report by Capgemini and Merrill Lynch, South Korea ranked fourth by growth rate with a 18.9% increase in the number of HNWIs following India, China and Brazil. The increasing demand for financial products and growing liquidity in the market are expected to inject added momentum into the growth of the asset management industry in South Korea.

Fulfilling Seoul's vision

Efforts have been made with tangible results since 2003 by the Seoul and national governments to fulfil the vision of turning the city into the financial hub of Asia. The South Korean government designated Yeouido as the nation's 'international financial cluster' in January this year and has been implementing a variety of projects, including construction of the International Finance Centre (IFC) Seoul.

Home to the financial authorities, stock exchanges, a concentration of South Korean and international financial institutions, and the national parliament, Yeouido is the most appropriate area in South Korea for an international finance centre. Proximity to airports and a beautiful natural environment along the Han River make Yeouido all the more attractive as a business destination.

IFC Seoul, set to become Seoul's financial landmark, is strategically located in the heart of Yeouido, with immediate access to major transportation systems. This project is a unique collaboration between the Seoul Metropolitan Government and AIG Global Real Estate, expected to be completed in phases from 2011 to 2013. The 500,000-square-metre world-class mixed-use project includes three premium commercial office towers, a five-star hotel, a three-level luxury retail mall, a multiplex cinema, fine dining and large new areas of public outdoor space.

IFC Seoul is expected to lure not only global financial companies, but also legal and consulting services firms as its major tenants. In May, Deloitte signed a long-term lease agreement to occupy nine floors, or about one-third of One IFC.

Quality of life, together with convenient working conditions, is what Seoul is offering the international business community. The Seoul Global Centre provides comprehensive information and services, covering areas from foreign direct investment to lifestyle and culture. The Fn Hub Korea supports global financial companies launching new businesses in South Korea and offers prompt one-stop services in assisting with regulatory and administrative matters.

Seoul's policy of 'culturenomics' combines culture and economy to sharpen the city's competitive edge and generate economic value. Design is now an integral part of Seoul's evolutionary growth, and the Han River Renaissance Project aims to achieve the world's most environmentally friendly urban renovation. Seoul is ready and able to fulfil the reputation and expectations of world-class financial institutions.

A solid real economy, rich liquidity and a highly educated population make Seoul an undisputed and unparalleled financial market with unlimited growth potential. Prompt and effective management of the recent global financial crisis has also led many to believe that South Korea will play a leading role in shifting the global financial paradigm. Based on solid and sustainable fundamentals, it may be just a matter of years before Seoul takes centre stage in Asia as a much sought after destination for international finance.

Retirement pension subscriptions (2005-2009)

Retirement pension subscriptions (2005-2009)

Gross domestic product growth (Q3 2008-Q2 2009)

Gross domestic product growth (Q3 2008-Q2 2009)

cp/62/Seoul Logo.jpg

Seoul International Finance Conference

Emanating from the Asia Financial Centres Summit hosted by the Financial Times in 2006, the annual Seoul International Finance Conference (SIFIC) hosted by Seoul Metropolitan Government has brought together international and South Korean financial experts such as Joseph Stiglitz (SIFIC 2007), Jim Rogers and Robert Mundell (SIFIC 2008). Seoul Metropolitan Government will hold its fourth conference to present a diagnosis and prognosis for the world's financial trends and to share insights into Seoul's greater role as a financial hub.

Theme: Seoul as an International Financial Hub after the Financial Crisis.

Date: November 6, 2009.

Keynote speaker: Dominic Barton, worldwide managing director, McKinsey & Co.

Venue: Hotel Shilla, Seoul.

Participants: 500 leading financial experts and bankers from South Korea and abroad.

International Finance Centre Seoul

The International Finance Centre Seoul (IFC Seoul) is a 500,000-square-metre world-class mixed-use landmark project, incorporating three premium commercial office towers, a five-star hotel, a three-level luxury retail mall, a multiplex cinema complex, fine dining and significant new public outdoor spaces. The project is located in the heart of Yeouido, with immediate access to major transportation systems. The development is the result of a unique collaboration between Seoul Metropolitan Government and AIG Global Real Estate (AIG GRE), which will act as the developer, finance arranger and project manager. AIG GRE will be responsible for the management of all marketing and leasing as well as ongoing asset management. The landmark project is expected to be completed in phases from 2010 through to 2012.

Contact Details

Address: AIG Korean Real Estate Development YH 24/F, Goodmorning Shinhan Tower, 23-2 Yeouida-dong, Youngdeungpo-gu, Seoul 150-712, South Korea

Telephone number: +822 6333 5700


Seoul Metropolitan Government

Seoul, the backbone of the South Korean economy with a population of 20 million people, including its conjoined satellite cities, offers the potential for ever-increasing financial services demand. Funds, retirement pensions and other inflows into long-term investment assets are expected to fuel immense growth of the asset management industry, entitling Seoul to be known as the next-generation financial hub. The city ranked ninth in the 2008 Worldwide Centres of Commerce Index, MasterCard's global assessment of commercial infrastructure readiness. Seoul is now poised to take off as a leading international financial city favoured by financiers around the world by offering a best-of-breed business-friendly environment.

Contact Details

Address: International Financial Hub Division, Seoul Metropolitan Government, 9th floor, Korea Press Centre, Taepyeongno 1-25, Jung-gu, Seoul, Korea 100-750

Telephone number: +82-2-2171-2778

Fax: +82-2-2171-2779




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