Invest KOREA

The Korean government earmarked a 6.5 trillion won ($5.57 billion) subsidy program to boost the competitiveness of the nation`s embattled shipping industry.

According to the action plans for key industrial sectors that the government announced on Wednesday, Korea Shipping Co., a new entity servicing troubled shippers will act as a shipping bank to buy vessels from shippers to lease them back to help them out of financial troubles.

Hyundai Merchant Marine is expected to be confirmed as the first beneficiary to the program next month, receiving 600 billion won to 700 billion won out of the initial paid-in capital of 1 trillion won.

The entity set up by state lenders Korea Development Band and Export-Import Bank of Korea and Korea Asset Management Corp., the state clearing house for distressed assets, will buy vessels from cash-strapped seagoing liners at market prices and lease them back to them. The entity will pay for the difference in book and market prices for the vessels in the form of purchasing their securities.

KAMCO which already runs sales-and-leaseback program will boost annual budget from current 200 billion won to 500 billion won.

The government has launched a fund with a 2.6 trillion won cap to finance orders for new vessels with an aim to place orders for more than five orders this year.

State lenders have been asked to create a maritime fund to subsidize a local shipper to purchase the terminal at Busan New Port from Hanjin Shipping, formerly the country’s largest cargo liner currently undergoing liquidation process.

By Kim Jung-hwan and Kim Se-woong

Copyrights Pulse by Maeil Business News Korea. All Rights Reserved.

Source: Pulse by Maeil Business News Korea (Jan. 25, 2017)