Government vows incentives to ‘social finance’ players

Financial authorities on Monday vowed full-fledged support for companies that pursue social values, under a long-term vision that co-prosperity is vital for the nation‘s economic sustainability.

“In order for the social finance model to settle as an independent and sustainable economic system, it is crucial to build a related hardware,” said Choi Jong-ku, chairman of the Financial Services Commission, in a meeting with the FSC-affiliated Financial Development Council members.

Calling for the participation of individual financial companies, the FSC decided to provide qualified players with 500 billion won ($446 million) in warranties and 100 billion in direct investment over the next five years, according to the chairman.

Social finance, a term referring to an approach to managing money in a way to deliver economic returns to society, is considered a key economic theme of the Moon Jae-in administration, which advocates the slogan of “inclusive growth.”

The social finance sector, despite its fast expansion in size, has so far largely been excluded from benefits and infrastructure, mostly because government support has been limited to policy finance for small and medium-sized firms, Choi added.

The financial watchdog is planning to come up with a comprehensive plan by next month on building a financial infrastructure and providing subject companies with improved access to government channels and public sectors, according to the FSC.

The commission will also work on a capital market revitalization plan, offering tax benefits to Kosdaq investors and developing a new benchmark index in the secondary market.

“The role of finance is crucial in creating an innovation-friendly business environment and to build a virtuous circle of investment,” said Choi.

“Our plan is to improve regulations and to establish a financial system in which innovators may start and flourish their business upon technology and ideas.”

The FSC blueprint includes deregulation for investment banks and security firms so that they may diversity their business fields and provide funds for growing industries.

By Bae Hyun-jung (tellme@heraldcorp.com)