[FORUM]Korea's No 1? Well, yes and no...Korea celebrated its No. 1 status in the world again last week, with the number of high-speed Internet users here exceeding 10 million.
Cable modems first appeared in Korea in 1998 and asymmetric digital subscriber line service began in Korea the following year for the first time in the world. The rate of high-speed Internet users in Korea (17 per 100 people) is four times higher than that of the United States and eight times higher than that of Japan. Ninety-eight percent of small towns and rural districts in the country are connected to high-speed Internet. We should be proud.
Korea ranks No. 1 in some unknown areas. Korea has the largest number of futures and options traded, well ahead of the runner-up. About 855 million futures and options contracts were traded last year, compared with 542 million contracts in Germany's Eurex. The two exchanges in Chicago, which are over 100 years old and pioneers of futures and options securities, came in third and fourth. Considering that Korea began trading futures contracts in 1996 and options in 1997, Korea zoomed up the charts in trading volume. Is this really something to be proud of?
These two examples, Internet service and futures and options, clearly show Korea's unique environment and Koreans' unusual characteristics.
Investments in telecommunication infrastructure stretch back to the 1980s, when the late Kim Jae-ik was chief economic adviser to the president, and has become the underpinning of the Internet. In addition, the congested residential environment and Koreans' quick tempers ignited the Internet boom.
Sixty percent of households live in apartments and 90 percent live within 4 kilometers of a telephone office. Just as railroads and telegraphs developed early in the United States because of the large distances between people, a large population in a small land is a blessing for the Internet.
Many Koreans are upset if high-speed Internet service is not installed immediately upon request, and they frantically click on the screen if a site does not open quickly enough.
Futures and options trading shows a different quality of Koreans: their tendency to gamble and speculate.
Futures were devised in the United States originally to hedge the volatility of share prices. When stock prices are unpredictable, investors buy underlying stocks and sell futures contracts or sell the stocks and buy futures contracts. Where there is a market, there are both buyers and sellers. The buyers are often speculators, betting on potential moves of stock prices. They should not be blamed for their speculation, since they are the ones who enable the market to function.
The problem is that there is not much hedging in the domestic futures and options market, but only speculators seeking a jackpot. A bigger problem is that individual investors account for half the transactions, and foreign investors only trade a little over 10 percent of futures and options contracts in the Korean market.
Futures traders here walked away from 21.6 billion won ($18 million) of debts to brokerages after losing their investments in the first half of 2002. If the amount were any larger, that could have been a financial disaster. Considering that trading atmosphere, it is hard to take pride in the fact that Korea has the highest rate of online stock trades in the world, 67 percent of all trades, compared to Japan's 4 percent and Taiwan's 8 percent.
The high-speed Internet and the futures and options market are future-oriented and developed in accordance with Korea's and Koreans' characteristics. But creating Internet content, creating synergy between the Internet and bricks-and-mortar industries and establishing Korea as the host of a respectable financial market are different issues.
"A global leader in information and telecommunications in the 21st century" sounds good, but for Korea to become a developed nation, Koreans will have to change their mind-sets and lose some of their gambling and hurry-hurry instincts.
* The writer is a senior economic writer of the JoongAng Ilbo.
by Kim Su-gil