Financial sector holds back Korea: WEF global competitiveness ranking

The World Economic Forum, commonly known as Davos Forum, left Korea’s global competitiveness ranking unchanged at 26th for the second straight year. Korea’s ranking has continuously fallen from a record 11th in 2007, except for 2012. This year, Korea’s financial market development ranking plunged to 80 from last year`s 87, marking the lowest among the 12 competitiveness categories. Underdeveloped financial market was the key reason behind lagging national competitiveness.

The state of Korea’s financial markets is gloomy when looking at sub indices. Among the 140 countries surveyed, the WEF rated Korea 113th in soundness of banks, 119th in ease of access to loans, and 99th in availability of financial services. The methodology of the WEF’s national competitiveness assessment has limits since the subjective judgment of businessmen of individual countries are reflected. A continuous decline in national competitiveness ranking still shows that there are severe holes in Korea’s financial policies.

The Financial Service Commission of Korea claimed that the objective indicators for Korea’s current financial state is favorable than what the World Economic Forum’s results show. However, President Park Geun-hye, at a speech to the public on August 6, stressed the need for financial reform, saying, “Korea is in global top 10 but the WEF’s assessment that our financial competitiveness is around 80th which is similar to African countries shows our financial reality.”

Financial Service Commission Chairman Lim Jong-ryong has repeatedly emphasized the need for financial reforms since his inauguration in March, but visible performance is yet to come. On the establishment of Internet-only banks, large companies’ entry has been virtually blocked, prompting many critics to speculate the emergence of competitive Internet-only banks. Korea lags behind China whose industrial capital can form consortiums to establish Internet banks. The financial regulator should refrain from making excuses and come up with real measures to strengthen financial competitiveness.