By Woo Tae-hee
Incheon is poised to start the "New Hong Kong City Project" which aims to develop the western port city into the global financial hub of Asia. As multinational businesses and financial companies begin to leave Hong Kong due to security issues, Incheon is seeking to attract them, taking Hong Kong's luster and becoming the new business hub. A public committee will be organized within this year to form a social consensus, establish a master plan, and implement it step by step starting in 2025.
The project raises high expectations for the future of Incheon. To accomplish this mission, two factors should be considered as a prerequisite for Incheon to become a financial hub. They are money and people. First, to attract money, the free flow of information and capital, which is not regulated by the government, should be guaranteed. Secondly, to attract financial talent to Incheon, the city needs to be the best place in which to live and work.
Korea still has a long way to go before it can grow into a global business hub. In National Competitiveness Assessments, recently published by the International Institute for Management Development (IMD) in Switzerland, Korea came in 27th place out of 63 countries, dropping four notches, which was the largest fall in seven years. According to the World Economic Forum (WEF) report in 2019, Korea ranked 13th out of 141 countries in global competitiveness, but 87th when it comes to government regulations, remaining in the lower ranks.
Major obstacles impede the domestic financial market, where many old regulations are accumulated. Our financial market lacks the ability to financially support our companies compared to the fast-growing speed and development of overseas financial markets. Now our companies don't have a choice but to turn to overseas financing to support the growing needs of corporate management. The road to becoming the financial hub is unpaved and tough to tread.
Aside from the financial hub issue, my sincere advice to Incheon city is to change the target to other forms of global business hubs, such as the R&D hub focused on bio-industry and logistics hub.
Korea is already recognized as a regional and logistics hub using its geographical advantage as a port and center of Northeast Asia. We are advancing our way beyond the Asia-Pacific region. Boeing establishing an avionics maintenance, repair and overhaul (MRO) center in Yeongcheon and Schenker Korea constructing its Asia-Pacific logistics center in Incheon in 2015 and expanding into a global distribution center is strong proof.
If we turn our eyes to the R&D hub, the long-standing efforts seem to finally pay off. One positive impact was Japan's export regulation, which encouraged us to strengthen R&D efforts in the materials, parts, and equipment sectors. Another strength has resulted from our continued R&D investment in the semiconductor and bio-industries.
Companies like Dupont (semiconductors, U.S.), Kanto Denka (semiconductors, Japan), Webasto (batteries, Germany), ASM (rare-earth, Australia), and Sartorius (viral vectors, Germany) proved that Korea has the potential to attract more foreign direct investment (FDI). These efforts in the R&D sector made Korea top the Bloomberg Innovation Index, 2nd in R&D intensity, and 4th in high-tech density, securing its place as an R&D hub.
As Incheon has recently solidified its position as a bio cluster, bolstering this sector would be helpful to becoming a hub city. Samsung Biologics and Celltrion are already in Songdo, while SK Bioscience announced that it will build a global R&D center there in 2024, which will have the so-called "Big 3" Korean bio companies gather in Songdo.
German chemicals and pharmaceutical giant Merck built the Korea Life Science Operation Center in 2019, and Dong-A Pharmaceutical constructed a bio-similar plant in Songdo. Also, we had Dong-A ST sign a memorandum of understanding (MOU) to build a biopharmaceutical lab. Lotte Group is said to be considering Songdo as a location to build a mega plant. On top of that, the World Health Organization (WHO) recognized Korea's potential as a global vaccine hub this February.
If Incheon puts more focus on the sectors where Korea is leading in the global value chain, its future as a global business hub is very promising. We need to devise strategies to induce more investments and systems to educate and secure talent for our future industries. The influx of companies and workers from overseas will increase the population, reboot economic dynamism, and provide inclusive solutions. Incheon already has the key.
Woo Tae-hee is executive vice chairman of Korea Chamber and Commerce Industry (KCCI).
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The project raises high expectations for the future of Incheon. To accomplish this mission, two factors should be considered as a prerequisite for Incheon to become a financial hub. They are money and people. First, to attract money, the free flow of information and capital, which is not regulated by the government, should be guaranteed. Secondly, to attract financial talent to Incheon, the city needs to be the best place in which to live and work.
Korea still has a long way to go before it can grow into a global business hub. In National Competitiveness Assessments, recently published by the International Institute for Management Development (IMD) in Switzerland, Korea came in 27th place out of 63 countries, dropping four notches, which was the largest fall in seven years. According to the World Economic Forum (WEF) report in 2019, Korea ranked 13th out of 141 countries in global competitiveness, but 87th when it comes to government regulations, remaining in the lower ranks.
Major obstacles impede the domestic financial market, where many old regulations are accumulated. Our financial market lacks the ability to financially support our companies compared to the fast-growing speed and development of overseas financial markets. Now our companies don't have a choice but to turn to overseas financing to support the growing needs of corporate management. The road to becoming the financial hub is unpaved and tough to tread.
Aside from the financial hub issue, my sincere advice to Incheon city is to change the target to other forms of global business hubs, such as the R&D hub focused on bio-industry and logistics hub.
Korea is already recognized as a regional and logistics hub using its geographical advantage as a port and center of Northeast Asia. We are advancing our way beyond the Asia-Pacific region. Boeing establishing an avionics maintenance, repair and overhaul (MRO) center in Yeongcheon and Schenker Korea constructing its Asia-Pacific logistics center in Incheon in 2015 and expanding into a global distribution center is strong proof.
If we turn our eyes to the R&D hub, the long-standing efforts seem to finally pay off. One positive impact was Japan's export regulation, which encouraged us to strengthen R&D efforts in the materials, parts, and equipment sectors. Another strength has resulted from our continued R&D investment in the semiconductor and bio-industries.
Companies like Dupont (semiconductors, U.S.), Kanto Denka (semiconductors, Japan), Webasto (batteries, Germany), ASM (rare-earth, Australia), and Sartorius (viral vectors, Germany) proved that Korea has the potential to attract more foreign direct investment (FDI). These efforts in the R&D sector made Korea top the Bloomberg Innovation Index, 2nd in R&D intensity, and 4th in high-tech density, securing its place as an R&D hub.
As Incheon has recently solidified its position as a bio cluster, bolstering this sector would be helpful to becoming a hub city. Samsung Biologics and Celltrion are already in Songdo, while SK Bioscience announced that it will build a global R&D center there in 2024, which will have the so-called "Big 3" Korean bio companies gather in Songdo.
German chemicals and pharmaceutical giant Merck built the Korea Life Science Operation Center in 2019, and Dong-A Pharmaceutical constructed a bio-similar plant in Songdo. Also, we had Dong-A ST sign a memorandum of understanding (MOU) to build a biopharmaceutical lab. Lotte Group is said to be considering Songdo as a location to build a mega plant. On top of that, the World Health Organization (WHO) recognized Korea's potential as a global vaccine hub this February.
If Incheon puts more focus on the sectors where Korea is leading in the global value chain, its future as a global business hub is very promising. We need to devise strategies to induce more investments and systems to educate and secure talent for our future industries. The influx of companies and workers from overseas will increase the population, reboot economic dynamism, and provide inclusive solutions. Incheon already has the key.
Woo Tae-hee is executive vice chairman of Korea Chamber and Commerce Industry (KCCI).
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