It was 2003, with South Korea still clinging to the euphoria of the 2002 World Cup, when the official road map to making Seoul Asia’s financial center was first announced. Hope was in the air and it quickly became a key task for current Mayor Oh Se-hoon, who previously served as the city’s mayor from 2006 to 2011.

But the hurdles were too high. Global financial institutions were put off by Korea’s rigid labor market and tight, yet somewhat vague regulations, despite the geopolitical advantage Seoul could offer. They quickly turned their eyes to Singapore, which lured them with lucrative tax benefits and warm weather.

Today, Seoul is more determined than ever to walk the road map and catch the eyes of investors and institutions leaving Hong Kong. The time is ripe, the Seoul Metropolitan Government’s point man on its financial hub project says.

“Hong Kong has been Asia’s leading financial center, but with China tightening its grip on the city, it is dealing with new risks and challenges such as an exodus of investors,” Hwang Bo-youn, Seoul’s deputy mayor for economic policy, told The Korea Herald in an interview on Thursday.

“Seoul is a few steps behind Singapore and Tokyo timewise, but our capital can provide financial institutions and investors with the best environment for the state-of-the-art technological development. It has the full potential to become Asia’s next financial center.“

That includes a commercialized 5G network service -- which is already moving onto 6G -- alongside customers who are early adapters and strong infrastructure for IT and AI-related technologies in the era of pay apps and digital banking, he added.

A major step toward becoming a leading financial center would require easing regulations and improving tax benefits for businesses, according to Hwang.

At the moment, Seoul’s benefits are restricted to handing out discounted office spaces to international firms seeking to enter Korea. The five-year benefit subsidizes 70 percent of the rent and maintenance fees for select businesses at the International Finance Center located in Yeouido, the nation’s financial hub. This is because Seoul is bound under the Restriction Of Special Taxation Act, making it unable to give tax benefits to businesses due to the authorities’ intention to balance the city’s power with other regions.

This is about to change, says Hwang, with President-elect Yoon Suk-yeol pledging to lift such restrictions on Yeouido, allowing the financial district to entice global businesses with tax benefits.

“The incoming president has vowed to designate Yeouido a special economic zone, which will change everything,” Hwang said.

“We plan to create a virtuous cycle of business for the financial institutions, where tax benefits, housing and education for children can be available in a single package for employers and employees.”

Hwang also addressed the nation’s rigid labor market and laws including the 52-hour workweek introduced in 2018 to reduce long working hours. According to the policymaking Financial Services Commission in 2020, the 52-hour law was a major complaint shared by the CEOs of 17 local branches of global financial institutions to then-chairman of the regulator Eun Sung-soo.

“I support the 52-hour workweek, but the law was revised without consideration of different sectors -- it needs to become more flexible,” he said.

The Korean law requires all laborers regardless of their positions and sectors to abide by the 52-hour limit, except fund managers and analysts. On the contrary, Hong Kong doesn’t have such labor restrictions at all, while Singapore makes exemptions depending on the person’s position within the firm or their income.

On the intensifying rivalry with other cities seeking to earn the title of “Asia’s financial hub” such as Busan and Incheon, the deputy mayor expressed concerns.

“The government has been relocating key financial institutions to other areas such as Busan for balance, but the result was that both Seoul and Busan lost their competitiveness as financial hubs.”

Busan is currently in the process of building a mega 140,000-square-meter financial town, while Incheon is trying to attract more clients to its Songdo International Business District.

“Major economies have only one city that works as a financial hub -- it’s New York City for the US and London for the UK. To make Korea flourish in the global society, the issue needs to move beyond a local rivalry between our cities.”

Hwang highlighted Seoul’s geopolitical advantage, strong infrastructure and the city environment itself, which was reflected in this year’s Global Financial Centers Index. Seoul ranked a record No. 12 as of March this year on the index, which evaluates competitiveness of financial centers based on surveys and 150 factors, with quantitative measures from the World Bank, the Economist Intelligence Unit, the OECD and United Nations. First published in 2007 from think tank Z/Yen Group in partnership with the China Development Institute, the index named New York the world’s top financial center.

“In this year’s ranking, Beijing is ranked No. 8, with Tokyo and Shenzhen each coming at No. 9 and No. 10 -- it means that Seoul came at No. 12 despite the regulations that have worked as a handicap for Seoul from growing as a financial hub,” Hwang explained.

“There is no other city like Seoul. It’s geopolitically close to other capitals in Asia and a cluster of future technology -- it can help financial institutions make headway into the future.”