The government will expand refund guarantee financing, bolster investments and increase the number of foreign workers for shipbuilders, in a coordinated policy drive to help the local growth-driver industry cement its lead globally, according to the industry, justice ministries and the financial policy regulator, Wednesday, according to The Korea Times.
Underpinning the initiative is the robust growth of and outlook for the local shipbuilding industry, as evidenced by $9.4 billion (12.4 trillion won) in orders won in the first three months of this year. It accounts for 40 percent of the global market share. Korea registered a 12-year high of 38.68 million compensated gross tonnage (CGT) as of March, enough to generate income for the next three years. CGT is an indicator of the amount of work necessary to build a ship factoring in the type and size of a particular ship.
Korea's share in high-value, green shipbuilding came to 70 percent as of the January-March period, a feat sustained by orders to build 17 green liquefied natural gas (LNG) vessels, 90 percent of the 19 to be built worldwide.
Further propelling the positive outlook is the rapid recovery of the global shipbuilding industry, and stronger global demand for high-value green vessels in line with sustainable growth pushes led by advanced economies.
The industry is expected to generate exports of $21.5 billion this year, an 18 percent year-on-year increase.
According to government policy measures announced jointly by the Ministry of Trade, Industry and Energy, the Ministry of Justice and the Financial Services Commission (FSC), the government will speed up efforts to ease and simplify visa and labor regulations to resolve labor shortages at local shipyards.
The justice ministry said about 5,500 foreign workers have been put to work in the first three months of this year, more than a third of the 14,000 workers the industry had said were needed this year.
The FSC said refund guarantee programs will be expanded to include more state-run and commercial lenders to provide greater access to stable financing for not only top but also medium-sized shipbuilders.
In a refund guarantee plan, the guarantor returns the installments paid by the ship buyer at the beginning of the shipbuilding contract. It is a safe option to recover the lump-sum amount in case the contract is terminated due to the builder's default.
The lenders will, the FSC added, ease the guarantee limit for shipbuilders and increase the financial organization's guarantee rate to 85 percent, up from 70 percent. This means the rate for smaller industry players will be lowered to 15 percent, down from the previous 30 percent.
The industry ministry will invest 180 billion won this year, to promote local sourcing of key input materials needed for shipbuilding and advanced technologies vital to cementing global shipbuilding dominance.