A dispute is brewing over the proposed relocation of the Korea Investment Corp.(KIC), South Korea’s sovereign wealth fund operator, from Seoul to a provincial area.
According to a local media MTN, calls are mounting to turn the city of Jeonju, located in North Jeolla Province, into a third financial hub after Seoul and Busan.
As the National Pension Service (NPS) has already moved to Jeonju three years ago, some politicians are proposing the relocation of other public financial institutions, including the KIC, MTN reported.
Kim Sung-joo, who was elected in Jeonju in last month’s parliamentary elections, is leading the argument.
Kim, a former chairman of the NPS said, “As a way to develop Jeonju into an international financial city, we will push for further relocation of financial and public institutions such as the Korea Investment Corp. and Korea Venture Investment Corp.”
The main reason behind the proposal is to balance regional development of South Korea. The unilateral development of the Seoul metropolitan area has been pointed out as an important economic and social problem in Korea. Some politicians, including Kim, argue that institutions of similar functions should be located in Jeonju to foster it as an international hub.
Critics, however, say the relocation would undermine the function of the agency.
The KIC, which is entrusted with the government and the Bank of Korea’s assets, has invested all of its assets ($157.3 billion as of the end of last year) overseas.
There are concerns that moving to a provincial city, about 250 kilometers south of Seoul, could lead to weakening competitiveness.
The NPS, which was relocated to Jeonju earlier, is also suffering from manpower and network issues.
“If the KIC moves to the provinces, it will be difficult to attract overseas investment or go through due diligence,” a source from financial investment industry said. “In particular, moving to Jeonju, where there are no international airports, will be fatal for KIC, which specializes only in overseas investment.”