S. Korea set to help struggling shipbuilders

State-run financial institutions will increase their support to shipyards and shipping lines struggling to cope with the fallout from the worldwide economic slump, the government said Monday. The Ministry of Knowledge Economy said the global economic crisis has caused new orders won by local shipyards to fall 90 percent on-year from January through September, making it necessary to take active measures to prop up the sector.
South Korean companies like Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. won 47 new orders in the first nine months of this year compared to 655 vessels won for the whole of 2008.
According to Clarkson Research, South Korean shipyards won 1.33 million compensated gross tons (CGT) of ships up till September, compared to 2.42 million CGTs by Chinese rivals.
"Under the action plan, the Export-Import Bank of Korea will move to increase shipbuilding-related financing, while Korea Export Insurance Corp. plans to introduce a package support coverage program that can reduce the burden on shipping lines," Cho Seok, deputy minister at the ministry said.
He said up to 500 billion won (US$430 million) will be offered as loans to shipyards to build and launch new ships, with efforts made to link direct loans with greater export insurance coverage that can help shipping companies place orders for new vessels.
"The financial support will be extended to both local and foreign companies without discrimination," the official said.
He said creditors of eight mid-sized shipyards undergoing workout programs plan to get these companies to move away from building complete ships and to become components manufacturers.
"These companies had actually built key components in the past before they tried to become full-fledged shipyards," he said, adding that Seoul is pushing for year-round restructuring efforts for the whole shipbuilding industry to deal with current overcapacity.