Korea extends policy support to smaller shipyards

The ministry said it was extending support to the sector in response to a request from the industry, as small and medium sized shipbuilders were still experiencing difficulties, despite an uptick in activity.

The ministry is to increase the fund for refund guarantees (RGs) for smaller and medium sized shipbuilders to KRW200 billion from the current KRW100 billion.

An RG offers ship owners a guarantee that a bank will refund payments for vessel orders in the case of non delivery. The guarantee is important for shipyards to get orders. The ministry also said that it was considering extending the RGs to include Tier 2 and 3 suppliers, in addition to shipyards.

The ministry announced it would extend an existing policy support package for a further two years. The package includes tax cuts and subsidies and applies to regions affected by the downturn in the shipbuilding industry, including Ulsan, Geoje, Tongyeong, Changwon and Mokpo.

The announcement also included several measures to promote the development of LNG and other environmentally friendly technologies in the Korean shipbuilding sector. The ministry said it would order seven to eight LNG-fuelled ships and planned to require eco-friendly ship orders from 2020. This follows a November announcement, in which the Korean government said it planned to place orders for 140 LNG-powered vessels by 2025.

The policy announcement included a KRW45 billion investment in direct current-based electric propulsion between 2019 and 2022.