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Gov’t rolls out support for small shipbuilders

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Nov 23,2018
Small and midsize shipbuilders will be getting 140 orders for liquefied natural gas (LNG)-fueled vessels in addition to 700 billion won ($619 million) in new financial aid and the extending of loans worth 1 trillion won.

These were the latest government measures to prop up the local shipbuilding industry.

“By the end of the year, our shipbuilding industry will be succeeding at getting orders for 12 million CGT (compensated gross tonnage), which would be close to the orders won in 2014,” said Sung Yun-mo, minister of trade, industry and energy on Thursday. “Once orders from 2018 are worked on, the shipbuilding industry will see recovery in the second half of next year.”

The government said, by 2025, orders for a total of 140 LNG-fueled vessels will be given to small and midsize (SME) local shipbuilders. The public sector will order 40 of them and the private sector will order the remaining 100. The government said the figure for the private sector was based on a survey.

It said it expects the next generation environment-friendly ships will translate into 1 trillion won in earnings for SME shipbuilders. In 2017, 78 SME shipbuilders made 601.2 billion won.

An early project will be converting two tug boats, which produce fine dust, to LNG next year.

The government added that, with the help of the private sector, it will invest 2.8 trillion won by 2025 in building bunkering infrastructure in Busan and Dangjin, South Chungcheong. The goal is to have an LNG bunkering infrastructure that can build 300,000 tonnes (300,693 tons) in 2019 and 700,000 tonnes by 2022.

The Ministry of Trade, Industry and Energy said it is positively reviewing the possibility of making it mandatory for all newly built government ships to be LNG-powered starting in 2020 while designating several major ports including Busan as emission control areas (ECA), which would encourage the conversion of more ships to environment-friendly LNG.

The government is also offering financial aid worth 700 billion won. This includes 100 billion won of financial aid given to shipbuilding-related materials manufacturers. Each manufacturer will be able to access a maximum of 3 billion won through the state-owned Korea Credit Guarantee Fund and Korea Technology Finance Corporation. Also the government will be offering 200 billion won to environment-friendly materials suppliers such as companies that develop scrubber systems that eliminate sulfur from heavy oils.

The government will also be expanding refund guarantees backed by the government from the current 100 billion won to 200 billion won. Refund guarantees play a critical role in maintaining an order, as failing to get a government-backed refund guarantee could lead to clients canceling orders. Loans worth 1 trillion won, held by companies located in areas that have been designated industrial crisis management regions, including Gunsan, Geoje and Mokpo, will have their maturity dates extended to the end of 2019 from the end of this year.

The government is also working on boosting employment in the industry, including extending job support for the shipbuilding industry through June 2019.

It plans to create 1,000 jobs in areas including ship welding and painting, 120 jobs specializing in environment-friendly and smart technologies and 40 in offshore plants.

But to boost competitiveness, the government will be allocating 42 billion won between 2019 and 2023 for setting up research and development platforms for hydrogen fuel cell ships and 29.7 billion won until 2021 on ship designing. The goal is to use only Korean core technologies by 2030.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]


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