Should Korea continue to pursue its goal of becoming a regional financial hub? The question is being raised as the nation takes stock of what has been achieved for the past 10 years since it unveiled this aspiration.

In December 2003, President Roh Moo-hyun disclosed a road map to make Seoul a financial hub in Northeast Asia by 2020. One key objective was to attract the regional headquarters of the world’s 50 largest asset management companies to Seoul by 2012.

Since then, an array of measures has been put in place to lure foreign financial companies. For instance, the government has built the Seoul International Financial Center to provide the infrastructure for multinational financial companies.

However, these efforts have borne little fruit. During the past 10 years, none of the world’s top 50 asset management companies has come to Seoul to set up their regional offices.

Government data show foreign banks’ presence in the domestic financial market has not increased at all during the period. In 2002, a total of 40 foreign banks operated here. Last year, the figure was 39.

Furthermore, there has been an exodus of foreign financial companies in recent years. Between 2009 and this year, a total of 15 foreign banks, insurers, securities firms and asset management companies have closed their operations in Korea.

One reason may be the adverse business environment in the wake of the U.S. subprime mortgage crisis in 2008. Many global financial companies had to deleverage and downsize their operations to survive.

The bigger reason may be that the Korean financial market is not attractive to them. Global companies allocate their scarce resources among countries based on which are most rewarding. They have to exit from unprofitable markets to channel resources into profitable ones.

One factor that makes the Korean market less attractive is regulations. Some regulations are in place to make the Korean financial system less vulnerable to external shocks. These safeguards are inevitable, even if they may affect the profitability of financial companies.

But on top of them, there exist many that serve no other purpose than simply to make the domestic financial market inefficient. This problem was highlighted by the World Economic Forum in its Global Competitiveness Report for this year.

The report notes that the competitiveness of Korea’s financial industry has deteriorated over the past 10 years. In 2003, the nation ranked 23rd in the category of financial market development. This year, its ranking dropped to 81st.

The WEF cites Korea’s “poorly functioning financial market” as one of the three issues that it should tackle to close the competitiveness gap with the three other Asian tigers ― Hong Kong, Singapore and Taiwan.

There is no disputing that Korea’s financial hub strategy has failed. This is most starkly illustrated by the tallest of the three IFC buildings on Yeouido, which still remains completely empty even one year after its completion.

However, the failure does not invalidate the goal of making Seoul a financial hub. The objective remains valid as Korea needs to foster the financial industry as a future growth engine.

Yet before going any further, policymakers need to take stock and think hard how to make Seoul distinct from other financial hubs. The strategy should include removing outdated regulations, which alone would go a long way toward making Korea attractive to foreign companies.