Deputy Prime Minister and Minister of  Strategy and Finance Hyun Oh-seok

The Board of Governors of the Asian Development Bank (ADB) will hold their annual meeting in Astana, Kazakhstan, from May 2-5. Korean Deputy Prime Minister and Minister of  Strategy and Finance Hyun Oh-seok will lead a Korean delegation that will include presidents of commercial banks.

True to the theme of the 2014 Annual Meeting, “The Silk Road -- Connecting Asia with the Changing World,” participants will discuss ways of linking improved regional connectivity and higher growth in Central Asia and beyond. 

The following are excerpts of a written interview between NewsWorld and Deputy Prime Minister and Minister of Strategy and Finance Hyun in which he spoke of his mission as Korean governor of the ADB annual meeting.

Question: Will you, as chief Korean delegate to the 47th ADB Annual Meeting, tell us about the agenda the Board of Governors of the ADB will take up during their annual meeting?

Answer: I feel heavy hearted with the sinking of the ferry Sewol, but decided to participate in the ADB Annual Meeting, taking advantage of the upcoming official holiday, since I cannot make light of international responsibilities regarding the ASEAN+3 Ministerial Meeting and the ADB Annual Meeting. 

The ADB Annual Meeting will likely include fervent discussions about the ADB’s roles in supporting Asian developing countries. I, Korea’s governor to the annual meeting, will give a keynote speech at the meeting in which I will make proposals on economic cooperation in Asia and the ADB’s roles and introduce Korea’s recent economic policies, including a three-year economic innovation plan and regulatory reform. 

I will attend the ASEAN+3 Finance Ministers’ Meeting prior to the ADB Annual Meeting and take stock of the economic developments in the region and discuss ways of beefing up economic cooperation such as the Chiang Mai Initiative Multil-ateralization (CMIM) and ASEAN+3 Macroeconomic Research Office (AMRO). I will also have interviews with credit rating agencies and foreign media outlets to explain Korea’s latest economic developments and economic policies, including the relaxation of regulations. 

Q: Will you touch on the developments of the international financial markets, including the U.S. tapering of its stimula-tive quantitative easing policy, its implications to emerging countries and the Korean economy, as well as policy tasks?

A: The international financial markets have shown signs of stability despite the U.S. Fed’s tapering of its quantitative easing policy. Market jitters over the U.S.’s interest rate rise, the Ukraine crisis, and worries about the slowing of the Chinese economy could increase uncertainties, however. In particular, it needs to pay attention to a paradigm change in the global economy and international financial situation in the wake of the full-fledged tapering of the U.S.’s quantitative easing policy.

From now on, there will be a long period of time when fundamentals of emerging economies will matter. The Korean economy is forecast to be less affected given its sound fundamentals, such as a current account surplus, foreign debts, and foreign currency reserves. We keep tabs on the possible strengthening of currencies and reentering capital centering around emerging economies with strong fundamentals, which could take place if dangerous assets will be given more preference amidst the U.S. prolonged currency easing policy. 

The Korean government plans to stren-gthen market monitoring and, if necessary, to swiftly take countermeasures in accordance with a contingency plan in order to minimize the negative impact on the Korean economy these risk factors will have. We’ll devote ourselves to ramping up the fundamentals of the Korean economy by implementing the three-year economic innovation plan and regulatory reform plan without fail.

Q: Will you elaborate on the current status of the transfer of Korea’s economic development experience model overseas and samples?

A:  Korea changed its international status in 2010 with its admission to the OECD as a member, turning itself around from an aid-receiving nation to an aid-giving nation. The hard work of the people and the warm international support following the Korean War have done a lot for Korea’s economic advancement.

Korea wants to return what she got from the international society and has been pushing the Knowledge Sharing Program (KSP) since 2004 to do its duty in full.

KSP is based on Korea’s economic development experiences so that the country can share its experiences with countries that need them in their economic development stages and together seek directions for economic development as a mutually cooperative program for mutual survival.

Since its start in 2004, KSP received very good reactions from the international society and has so far provided its support to 46 nations in cooperation with such international financial organizations as the ADB, International Development Bank, and the World Bank, altogether eight such organizations.

Korean has also been cooperating with Asian countries and ADB member nations. It has made a great contribution to the establishment of a development bank in Vietnam. Korea also has provided its experience in setting up a special industrial economic zone in Uzbekistan.

Korea has also made its share of contributions to the ADB in hosting knowledge-sharing conferences and consulting for the capacity to develop jobs and balance the development progress in the Asia-Pacific region through knowledge sharing cooperation.

From now on, Korea plans to strengthen its cooperation with ADB member nations on KSP to create an Asia that is moving together. 

Q: Can you please say something about the Creative Economy, the nurturing of investment banks, and the development of the financial industry?

A:  The government has drawn up a three-year economic innovation plan to sustain the development of the economy and to reform its structure with a focus on one of the three major strategies being pushed: the realization of the Creative Economy as a core task of dynamic economic reform, calling for an economy with a strong foundation, dynamic economic reform, and an economy with balanced domestic and export activities.

What’s important in the realization of the Creative Economy is investments in start-ups and venture businesses by attracting venture capital inflows in the financial market.

Under such understanding, the government has been stressing the strengthening of the investment banking capacity as part of the three-year economic innovation plan and the nurturing of the financial services industry. In order to create an environment for providing financing based on technological collateral instead of mortgages for attracting the inflow of capital, a database for technology evaluation and a technology credit evaluation organization must be in place. 

For strengthening the IB functions of large securities firms, the government intends to substantially ease the net capital requirement (NCR) regulations as well as those on private equity funds.

The government also plans to reexamine the financial regulations from the start and reform them. 

In the photo are Deputy Prime Minister Hyun Oh-seok, left, U.N. Sec.-Gen. Ban Ki-moon, 2nd L, 

World Bank President Jim Yong Kim, 2nd R, and IMF Managing Director Christine Lagarde, right, 

at the IMF and WB Spring Meeting in Washington DC on April 11. (photos: courtesy of MOSF)

G20 Finance Ministers' Meeting and IMF/WB Spring Meeting

Deputy Prime Minister Hyun Oh-seok attended the G20 Finance Ministers and Central Bank Governors Meeting and the IMF/WB Spring Meeting from April 10-12 in Washington, DC.

At the meeting, Deputy Prime Minister Hyun  stressed that monetary, fiscal and other macroeconomic policies should be implemented together with structural reform in order for economies to grow in a sustainable manner. The deputy prime minister talked about Korea’s Three-Year Plan for Economic Innovation and the Regulatory Reform, which are aimed to increase growth potential.

Regarding the role of the IMF, Deputy Prime Minister Hyun argued that the IMF should recognize spillover and spillback effects advanced countries’ economic policies have on the global economy as well as emerging economies. The Deputy Prime Minister also called for the fund to improve its surveillance and policy analysis in order to provide more efficient, country-specific policy advice.

The 29th IMFC Communique emphasizes strong measures to maintain the global recovery, and urges advanced economies to gradually taper QE and emerging countries to prepare for the taper, while stressing the importance of fostering growth engines and carrying out structural reform in order to increase growth potential in the mid- to long-term.