In a move that will likely cause further complaints from China, Japan and other shipbuilding nations, the South Korean government has unveiled a package of measures to support small shipbuilders in the country.
According to a report by the Yonhap news agency, the measures call for the government and private companies to place orders for a combined 140 vessels powered by LNG by 2025, including two next year. Sung Yun-mo, South Korea's minister of trade, industry and energy, expected the orders to create a new market worth around 1 trillion won (US$890 million) for small and medium-sized shipyards. Last year, 78 smaller shipbuilders in South Korea posted slightly over 600 billion won in combined sales.
The government and the private sector plan to invest 2.8 trillion won by 2025 to build infrastructure for the operation of LNG-powered vessels.
Under the measures, the government will also provide cash-strapped shipbuilders and suppliers with 700 billion won in new financing and roll over maturing loans and debt guarantees worth 1 trillion won by one year. In addition, the government will push to extend the period of special state support for employment in the shipbuilding industry by six months to June next year. The ministry said the package may help local shipyards overcome their current crisis and take the top spot in the global shipbuilding industry, whose focus is shifting to eco-friendly and smart vessels.
“South Korean shipbuilders are expected to win new orders worth 12 million compensated gross tons (CGTs) this year, a level close to their 2014 records,” Industry Minister Sung Yun-mo said. “A full-fledged recovery is expected to start in the second half of next year, when they begin work on new orders.”
South Korea’s big three Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering appear to have overcome their recent financial problems but earlier this month Japan made a complaint to the WTO alleging government support for the three broke the rules.