South Korea earmarks $9.8bn to drive shipbuilding orders

The South Korean government is prepared to spend KRW11.2trn ($9.8bn) by 2020 by placing shipbuilding orders to help the country’s ailing shipbuilding industry tide through the downturn, reports said.

The government intends to order more than 250 public ships, including naval and military vessels, with the earmarked funds, the local media cited the finance minister Yoo Il-ho as saying.

“The world’s shipbuilding industry is expected to suffer shrinking demand until 2020. In order to deal with an order shortage, the government will help shipyards receive new orders for 250 or more vessels, worth KRW11trn, by 2020 from the public sector,” Yoo was quoted saying.

“The government will encourage the shipbuilding industry to restructure their business into a competent and profitable one, as well as divert their focus to high value-added ship services from shipbuilding,” he said.

The government’s plan came as the country’s top three shipbuilders – Hyundai Heavy Industries (HHI), Samsung Heavy Industries (SHI) and Daewoo Shipbuilding & Marine Engineering (DSME) – are all restructuring and slashing workforce in the face of debts and shrinking work.

“Aggressive restructuring will be carried out to ensure financial soundness of the companies in case the dire situation prolongs and they would be ready should things start to recover. Companies will be monitored regularly on their restructuring progress and prevented from winning offshore orders at low prices,” Yoo said.

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