South Korea to Stimulate Ailing Shipbuilding Sector

South Korea's government and public entities will place orders for more than 250 ships, worth about 11 trillion won (US$9.59 billion), with domestic shipyards by 2020 as part of a plan to stimulate the ailing shipbuilding sector, South Korea's finance minister said Monday.

    The government's industrial restructuring measures, finalized at a meeting of economy-related ministers, also call for upgrading the competitiveness and profitability of the shipping industry as well as shipyards, as the two sectors have been suffering from massive losses due to a global slowdown and contracting demand, South Korea's Finance Minister Yoo Il-ho said.

    The government will lead shipbuilders to shift their focus to higher value-added ship services and extend as much as 6.5 trillion won in fresh financing to help boost shipping companies' competitiveness, the minister said.

    The world's shipbuilding industry is expected to suffer shrinking demand until 2020," Yoo said at the ministerial-level meeting in Seoul. "In order to deal with an order shortage, the government will help shipyards receive new orders for 250 or more vessels, worth 11 trillion won, by 2020 from the public sector." The government will also spend 1.7 trillion won by 2017 to boost the local economy of the coastal regions where big shipyards are located while injecting an additional 1 trillion won over the next five years to create various public works projects in the affected coastal areas.

    The 6.5 trillion won financing program for the shipping industry has come as the collapse of Hanjin Shipping Co., South Korea's No. 1 shipper, has caused a worldwide logistics disruption and a drop in cargo handled at the country's seaports.