South Korea’s Financial Services Commission has announced that it would allocate KRW820bn ($693m) to help domestic owners to modernise their fleets, South Korean media Yonhap reports
The financial package aims to support smaller shipowners to build 59 new ships in total, comprising of 38 cargo ships and 21 passenger ships.
Under the plan, shipping companies will be reimbursed for up to 60 percent of the cost of the newbuildings and the state-run Korea Ocean Business Corp will guarantee more than 95 percent of the loans.
Additionally, policy bank The Korea Development Bank will also fund 20 percent of the construction cost of the newbuildings.
The move is part of South Korea’s efforts to replace ageing vessels to improve maritime safety.
According to Yonhap, more than 20 percent of passenger vessels and 68 percent of cargo ships in South Korea are over 20 years old.