Seoul warns of more hardships as it tables $5.57bn of more maritime subsidies

The South Korean government offered both carrots and sticks to the local maritime community yesterday, suggesting there will plenty more firms entering restructuring this year while also lining up a whopping $5.57bn in state aid for the nation’s hard hit lines and yards.

The government convened a special meeting Wednesday to look at restructuring of shipping, shipbuilding as well as the steel and petrochemical sectors.

“If last year we put together the rules and framework for corporate restructuring despite hardships, this year we will engage in restructuring in earnest and make sure the efforts are carried out smoothly,” finance minister Yoo Il-ho said.

Participants at the meeting admitted the nation’s yards were in for another very tough year while lines will struggle with continued overcapacity.

Seoul also outlined a new ship finance vehicle, Korea Shipping Co, which will be armed with KRW6.5trn ($5.57bn) to buy ships from local lines and they charter them back. Hyundai Merchant Marine (HMM) has wasted little time, tapping the new vehicle for $515m yesterday.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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