Download The Vision of Busan as a Maritime Finance Center Yong Beom Kim

행사명
8th Annual Marine Money
Korea Ship Finance Conference
일 시 ‘14.11.4(화) 09:00
장 소 부산 파라다이스호텔
The Vision of Busan as a Maritime Finance
Center
November 4, 2014
Financial Services Commission
Director General
Yong Beom Kim
(9:40~10:00) 해양금융중심지로서 부산의 비전 (김용범 국장님)
Good morning, Ladies and gentlemen,
My name is Yong beom Kim, General Director from the FSC.
I am pleased to participate in the 8th Annual Marine Money Korea Ship Finance
Conference and to present today's agenda.
I hope today's conference will be an opportunity to delve deeper into recent
trends in marine finance and to discuss further development plans for Korea's
shipping finance.
I would first like to thank Chairman James Lawrence of Marine Money
International for organizing this important event, and to Mayor 서병수 for his
continued support to marine finance, and to everyone for your kind presence
today.
In my speech today, I would like to briefly mention recent trends and
characteristics of marine finance. Secondly, Busan's potential as the central hub
of marine finance. Thirdly, I will address the government's main strategies to
develop Busan as a centre for marine finance.
Recent trends and characteristics of marine finance
First, I would like to highlight recent trends regarding marine finance.
Financing volumes in the shipping industry has decreased continuously since
the global financial crisis of 2008. A slight rebound occurred in 2010 but tighter
regulations under Basel III made banks less willing to lend thus rebound was
minimal. The number of new shipbuilding deals have stalled at 200 deals
annually, as opposed to the height of 500 in 2007.
However, despite the downward market trend two notable changes ought to be
addressed.
First is a strong influx of shipping finance from Asia. Ever since the GFC, with
less lending appetite from European banks, strengthening shipbuilding across
Asia has prompted its regional banks to increase commitments to shipping
finance.
In 2008, only one institution made it to the Global 40 rankings, but recently 5
Chinese banks, 2 Korean banks, 2 Japanese banks have entered the top 40.
Secondly the market has evolved to utilize various financial structures. Where
the proportion of traditional syndicated debt financing has decreased,
shipbuilders are increasingly using high yield bonds and private equity funds to
fund their projects.
In 2007, bond issuance only took 10% of the new deal volume, but as of 2013,
it takes up to 50%. Private equity funds have expanded their share for more than
five times their volume of 2008.
Innovative financial structures are becoming increasingly appealing for
investors and we assume this trend to continue. Amidst this sentiment, there is a
growing need for a shipping finance hub where advanced financial structures
can be provided. This coincides with Busan's advantages as Asia's central hub
for shipping finance.
The potential of Busan as the central hub of marine finance
Busan is one of Asia's prized cities.
As a gateway from the Pacific to Asia's mainlands, Busan has long served as a
central port. It comes third in transshipment volume, the fifth largest harbour in
the world in terms of cargo volume. In addition, global shipbuilders are locally
located. Locally nearby 울산 and 경남 province have an immense network of
shipbuilders, shipowners and related industrial clusters.
Busan's geopolitical significance is no less than that of its global peers such as
Ports of Hamburg, Oslo and Piraeus.
Shipping and shipbuilding industries are closely correlated front back industries
where they exert significant impacts in shipbuilding, steel exports, port and
terminal operations and finance.
Therefore, with an effective development plan Busan has vast potential to
become a Asia's financial hub specialising in marine finance.
Utilizing Busan's advantages, the Korean government has established Marine
Finance Center, which consists of three public financial institutions, namely
Korea Eximbank and Korea Trade Insurance Corporation, and Korea
Development Bank.
The combination of the three financial institutions brings expertise in maritime
finance running 59 trillion won, which is about the fourth largest asset volume
in the world's ship finance market.
Each institution's renown professionals in shipping finance will network and
cooperate closely more than ever to provide shipowners and yards better access
to innovative and alternative financial structures, eventually contributing to the
maturation of marine financing industry.
Despite Busan's relatively small global recognition, establishment of BIFC and
MFC has laid important infrastructure for Busan's leading role as an
international financial hub.
The government's key plans
The government has enacted legislations, revised policy projections to enhance
Busan's opportunity as a financial centre for marine finance.
The following are the government's main strategies.
Improvement in the regulatory landscape and business environment will
encourage global players to actively engage in business activities amid well
developed infrastructure.
Last year President Park's administration publicized strategic plans on
"Increasing
Korea's
financial
industry's
competitiveness('13.11.27)",
"Reforming financial regulations('14.7.10)" which was an initiative to banish
old regulations that inhibited the financial industry's competitiveness.
Secondly, the government will facilitate Busan's recognition as the financial hub
specializing in maritime finance and its derivatives.
Busan's locational and industry orientated merits were taken into account when
the Marine Finance Center, Marine guarantee agency and ship operators moved
their headquarters in BIFC. In this way, main businesses will be centralized in
Busan creating synergies amongst them.
Moreover, it will be an opportunity to integrate accumulative experience from
related sectors such as legal, accounting, consulting entities.
Thirdly, the government will initiate advanced financial schemes and
mechanisms to revitalize the marine industry through continued financial
support.
Given the market's high volatility, where the recession has largely dampened
investment sentiments, financing new ships have become incredibly difficult.
Therefore the government has formed a public-private partnership between
private investors and financial policy institutions to set up a "Marine guarantee
agency".
The agency will support traditional debt financing as well as facilitate various
structured finance projects.
The government has promoted equity investments in "ecoship funds" and
tonnage banking is increasing recently, and the MFC's participants cooperate to
incrementally increase their financial support.
Last but not least, investing in human resources in marine finance is essential.
Proficient and qualified experts will continue this momentum and enhance the
participating institutions' professionalism thus HR investments and training will
be very important.
Busan International Training Institute has started its operations last month, local
universities such as Busan University and Marine university, research institutes
such as KIOST(Korea Instistute of Ocean Science and Technology),
KMI(Korea
Maritime
Institute),
KHOA(Korea
Hydrographic
and
Oceanographic Administration), and the MFC will together form a industryacademic marriage,
The forementioned institutions will interconnectedly collaborate while the
government will act as medium nurturing Busan as the "mecca of maritime
finance".
Ending credit
If the suggested strategies are successful, Busan will surpass its current status as
a central hub for cargoes and ships but an internationally recognized maritime
financial hub.
I believe Busan's planned framework and natural clout to become the financial
hub of Asia should be respected. Building on this groundwork, meticulous
followups are required for the city to truly become maritime financial hub it
desires.
Whether Busan's dream materializes lies in Busan's hands.
Busan will pursue a long journey of leading organizations of related industries,
financial entities and academia.
The government and financial policy institutions will persistently support any
necessary requirements for this project.
I hold high prospects for Busan. I hope financial institutions, investors, and
legal entities find Busan's beauty as an attractive business hot spot in the near
future.
And I hope today's participating guests will bring about bright insights and
thoughtful arguments, which hopefully will lay the strong foundation for
Busan's contribution to maritime finance.
Thank you all, for your kind attention.