Korea Development Bank has begun preparations for the establishment of the 'Southeast Investment Corporation'. However, discussions are expected to be rocky due to ongoing controversies regarding overlap with the bank's duties and the effectiveness of policies. Ahead of next year's local elections, there are also criticisms that this is a populist policy to appease voters in Busan.
The establishment of the Southeast Investment Corporation is a campaign promise made by President Lee Jae-myung aimed at supplying funds to restore the industrial competitiveness of the Busan-Ulsan-Gyeongnam (Bulgyeong) region.
According to the financial sector on the 22nd, the Korea Development Bank recently established a support task force (tentative name) for the creation of the Southeast Investment Corporation. An official from the bank said, "The task force is conducting domestic and international case studies, as well as analyzing the Southeast region's industries." The Korea Development Bank is expected to play a central role in the capital contribution and business restructuring when the corporation is established.
Earlier, President Lee Jae-myung stated during his presidential campaign that he would establish the Southeast Investment Bank. Two days before the election, he said, "I will establish the Southeast Investment Bank in Busan," adding, "I will manage a large-scale policy fund to invest in and lend to key industries such as shipbuilding and automotive, and will take responsibility for fostering industries and creating infrastructure." He also outlined specific investment plans, stating that the initial capital of about 3 trillion won would be jointly contributed by the central government, local governments, the Korea Development Bank, the Industrial Bank of Korea, and the Export-Import Bank.
While Busan, whose previous relocation has effectively fallen through, is advocating for the establishment of the Southeast Investment Bank, the government has decided on a different course with the Southeast Investment Corporation. This is because the corporation is more free from regulations than a bank. Minister Jeon Jae-su noted on the 10th, "Instead of establishing a Southeast Investment Bank, I think it is better to create the Southeast Investment Corporation, which can quickly create an environment for investment and secure large-scale investment resources."
The bill that will serve as the legal basis for the establishment of the Southeast Investment Corporation has already been submitted to the National Assembly. It is currently pending in the relevant standing committee, and discussions are expected to intensify in the second half of this year. However, there are predictions that pushing forward with this project will not be easy due to a significant number of issues that need to be resolved, such as the previous government's election promise regarding the 'transfer' of the Korea Development Bank to Busan.
The most challenging issue is resolving the overlap of duties between the Korea Development Bank and the Korea Ocean Business Corporation (KOBC). The Korea Development Bank has relocated its Maritime Industry Finance Headquarters to Busan and operates the Southeast Investment Finance Center. KOBC, based in Busan, also provides financial support for shipping companies with respect to vessels and port logistics infrastructure. An official in the financial sector stated, "There are discussions about transferring the marine sector duties of the Korea Development Bank and KOBC to the Southeast Investment Corporation," adding that there are concerns about possible noise during the process of adjusting duties between the corporations.
While the goal of restoring industrial competitiveness in the Busan-Ulsan-Gyeongnam region has been presented, there are criticisms that the blueprint is vague and lacks a concrete business plan. Professor Seo Ji-yong from Sangmyung University noted, "While I can understand the intention behind this as an alternative amid the declining ability of local banks to supply regional finance, a detailed and refined policy design regarding what specific projects the Southeast Investment Corporation will pursue should be prioritized."