Unfazed by WTO filings, Korea unveils new shipyard support package

NOVEMBER 27, 2018 — South Korea’s shipbuilding support practices have become the subject of a complaint filed at the World Trade Organization by Japan that is now supported by the EU and Taiwan. Nonetheless, Korea last week rolled yet more shipbuilding supports, in the shape of a package of new measures intended to address the plight of small and midsized shipyards struggling with a lack of new orders.

Unveiled by Industry Minister Sung Yun-mo, the measures call for the government and private companies to place orders for a total of 140 vessels fueled by liquefied natural gas (LNG) by 2025, including two next year.

According to the Yonhap news agency, the industry ministry 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-fueled vessels.

Under the measures, reports Yonhap, 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,” Yonhap reports Industry Minister Sung Yun-mo as saying. “A full-fledged recovery is expected to start in the second half of next year, when they begin work on new orders.”