South Korea Sets Up $1.2 Billion Shipping Fund
The South Korean government has announced a $1.2 billion ship investment fund to support the nation’s struggling shipping industry.
Yonhap news agency reports the fund will be used to help shipowners buy and sell vessels with less financial risk and to guarantee acquisition of new vessels ordered in the country shipyards, as Korea Trade Insurance Corporation and Korea Maritime Guarantee Insurance will offer insurance services for the deals. The Korea Development Bank will also participate in the fund.
South Korea’s economy is highly dependent on exports, and it has been hit by a drop in global trade. Companies such as Hyundai Merchant Marine and Hanjin Shipping were hit when the nation suffered an 11-month drop in exports last year.
Local media reports that the Korean government will also require local shipbuilding companies to restructure and downsize in order to optimize their operations during the challenging market times. Mergers and acquisitions are expected.
Hyundai Heavy Industries, South Korea's largest shipyard, and rival Daewoo Shipbuilding & Marine Engineering have reported substantial losses due to reduced ordering of vessels and offshore units.