South Korea to check profitability of all ship orders

South Korea to check profitability of all ship orders

The South Korean government has announced that the state-run financial institutions will commence profitability checks on shipbuilding orders and large overseas construction projects to prevent local companies from winning contracts that will lead to losses.

According to Choi Kyung-hwan, South Korea’s finance minister, shipyards will not get support from local financial institutions if they accept zero profit orders.

Choi said state financial institutions need to take on more responsibility in preventing companies from signing contracts.

“Money losing projects can put pressure on financial institutions and if lenders are seriously hurt, this can be a burden for the economy as a whole. There is a need to fundamentally tackle this problem,” he stressed.

Following the announcement, the Export-Import Bank of Korea, Korea Development Bank and Korea Trade Insurance Corporation have all said they will mandatorily coordinate with the government’s decision.

Jason Jiang

Jason worked for a number of logistics firms following his English degree, then switched this hands-on experience to writing and has since become one the most prolific writers on the diverse China logistics industry writing for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week. Jason’s access to the biggest shippers with business in China has proved an invaluable source of exclusives.

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1 Comment

  1. Avatar
    MP Nayar
    November 13, 2015 at 9:03 pm

    Very wise move to over compete to secure business/and later on rely on variations. This will ultimately prevent the so called cost blowdowns.