SEOUL, Sept. 26 (Korea Bizwire) – South Korean financial authorities have announced it is set to reform the regulatory landscape of the country’s investment sector to sway investors’ interest away from housing investment and towards startups and venture capital for innovative companies.
According to the Financial Services Commission on Sunday, South Korean financial authorities are poised to introduce changes to the current financial system in a bid to create cash flow for startups and small and medium-sized innovative enterprises, and away from overheated markets like housing investment and household loans.
The new move in the financial sector is set to create job opportunities as well as spur more policy and financial support from the central government to prepare Korea’s industry for the fourth industrial revolution.
The Financial Services Commission is set to introduce macro-prudential regulation by the end of this year, which will require banks to reserve more capital based on their assessment of an unequal distribution of assets. This move will force banks that focus too much on housing investment and household debt to divert their attention towards venture capital equity investment in startups.
South Korean financial authorities are reportedly considering the idea of adjusting the loan-to-deposit ratio in favor of investment in innovative and small and medium sized enterprises, which could see more banks refrain from giving out household loans and direct assets to the business sector, encouraging financial stability and helping to create successful startup companies.
In addition, stricter regulations are also expected to be imposed on high-risk loans, such as housing finance projects and residential mortgages, while other plans will ease regulations for innovative financial startups to create a more friendly business environment.
The government’s financial support for fields related to the fourth industrial revolution, including drone manufacturers etc., will also double from 20 trillion won to 40 trillion won by 2012 under the new financial reform.
“We are drastically ramping up our support for industries related to the fourth industrial revolution after establishing a new standard. While the scale of financial support is expected to exceed 40 trillion won and beyond, the detailed plan will be announced after the Chuseok holiday,” one Financial Services Commission official said.
According to the standard set by the New Growth Industry Committee at the Korea International Trade Association, 3D printing, robotics, drones, electric cars, solar batteries and bioceramics are among the few industries that will receive increased support from the government.
Hyunsu Yim (firstname.lastname@example.org)