The measures include continued support for businesses and individuals, with some focus being diverted back to pre-Covid policy work to support innovation and data-driven initiatives. South Korea’s FSC (Financial Services Commission) has laid out the government’s financial policy plans for the second half of 2020.In the first half of the year, the FSC largely focused on providing financial support in response to Covid-19. This will continue, as the FSC works to distribute over KRW 175 trillion in financial assistance programmes authorised by the government.The key industry stabilisation fund launched on 28 May, and will be operational in June. The airline, shipping and other hard-hit industries will be eligible for financial support from the fund, subject to conditions.In the corporate bond market, about KRW 1.2 trillion in P-CBOs (primary collateralised bond obligations) have been issued as of end-May, with issuances worth over KRW 1 trillion pending for June. The initiative was announced in April.A KRW 10 trillion special purpose vehicle will also be launched to provide support for purchasing low-rated corporate bonds and commercial paper once the third supplementary budget is passed at the National Assembly.The government has additionally introduced a new KRW 2 trillion corporate asset sales support programme on Thursday (11 June), through which KAMCO (Korea Asset Management Corporation) will purchase corporate assets at fair value.To promote financial inclusion in Covid-19 recovery efforts, the government and financial institutions are also working to raise the availability of microfinance products, while KAMCO starts purchasing KRW 2 trillion in overdue loans at the end of this month.Also in the works is a new consumer credit bill, which will incentivise financial firms to assist distressed debtors on their own.Supporting innovationDuring the second half of the year, the FSC will also refocus its efforts on promoting innovation. This will include targeted support for 1,000 innovative firms, the first 200 of which will be selected within this year.Additional support will be provided to innovative firms to help them raise funding through government-sponsored events, in addition to the provision of financial and consulting support to selected firms. The initiative has been in the works since February.The government is also opening an incubation centre for star-ups next month, providing office space, conference rooms, networking space and classrooms. The plan was also among the FSC’s ten key policy tasks set out in February.A separate special purpose vehicle, launched by KAMCO, will be operational by end-June to facilitate movable asset-backed lending and support the management and disposal of movable collateral. The plan was initially said to be for a KRW 20 billion investment fund to test run IP backed securitisation.Data initiativesThe government is also working to promote a new points-based business credit scoring system for SMEs and small merchants who have difficulty accessing credit scoring channels. The new system has been modelled after Dun & Bradstreet’s Paydex model, and will analyse firms’ non-financial and commercial transaction information to generate credit scores.The FSC will also work to improve the personal authentication and identity verification system used in financial services during the third quarter this year, through a dedicated task force launched earlier this month.In recognition of the importance of public trust in the security and safety of personal information and assets, the government will work on new measures that will require financial companies to establish internal control mechanisms to ensure data privacy.Last month, the FSC launched a new financial data exchange, providing a secure distribution platform for buyers and sellers of financial, telecommunication and corporate data. So far, 317 data have been registered and about 120 transactions have taken place.The FSC has also identified from industry engagement that there are some 116 companies interested in launching MyData businesses, which will allow financial firms and fintechs to offer financial advice to customers using the data they make available through the MyData platform. Licensing of MyData businesses could commence as early as October.
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