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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.