Korean Government to Set Up a Support Body for Shipping Industry

Korea Maritime Promotion Corporation, a dedicated support organization for the shipping industry, will be established in Busan in June of next year with capital of 5 trillion won (US$4.5 billion).

The Ministry of Oceans and Fisheries announced a plan to establish Korea Maritime Promotion Corporation on August 24 at the meeting of the ministers of economic affairs at Seoul Government Complex Building. The establishment of the corporation is based on the construction of a shipping and shipbuilding powerhouse through the coexistence of shipping and shipbuilding, one of the top 100 national projects set by the new government.

Korea Maritime Promotion Corporation will deal with the financial and industrial policy support tasks necessary for the reconstruction of the shipping industry in Korea which withered away due to a long-term recession coupled with the “Hanjin Shipping bankruptcy.” The corporation will also take on existing maritime financial support programs and provide financial support services such as investment in and guarantee for vessels and terminals, purchases of secondhand vessels and re-chartering. The corporation will also provide information on market conditions to support deals on shipping services, promote projects to stabilize shipping company management such as the replacement of old vessels, and operate the nation’s essential shipping system to help transport cargoes in emergencies.

The government set up Korea Maritime Promotion Corporation with the initial paid-in capital of 3.1 trillion won (US$2.79 billion). Among the capital, 1 trillion won (US$900 million) will come from Korean Ships and Oceans, 550 billion won (US$495 million) from Korea Maritime Guarantee Insurance and 1.55 trillion won (US$1.39 billion) from the government. If necessary, the company will increase its capital to 5 trillion won (US$4.5 billion) through additional investment.

On the other hand, the government announced on the day that it will issue a 100 billion won (US$90 million) special guarantee for refund guarantees (RGs) issued by the Korea Development Bank and the Industrial Bank of Korea for small and medium-sized shipbuilders facing bankruptcy crises due to deteriorating global market conditions. An RG is a guarantee which a financial institution gives a shipowner instead of a down payment if a shipbuilder becomes unable to deliver a ship due to its bankruptcy during shipbuilding. When an RG is issued, a shipbuilder can land an order.