The government will strengthen financial support for small shipyards to facilitate smooth order activities.
The Financial Services Commission and the Ministry of Trade, Industry and Energy announced on the 29th that policy finance institutions will support the issuance of export advance payment guarantees (RG) for small shipyards with shipbuilding capabilities.
While RG for domestic use is issued to small shipyards, the issuance of RG for exports has been limited due to a lack of experience in constructing export vessels. Considering that small shipyards lack experience in securing orders for export vessels, the government has improved the system to allow external organizations to verify the shipbuilding capability and business feasibility of the ordered vessels.
For orders of small shipyards with verified business feasibility by external specialized institutions, Korea Development Bank or Industrial Bank of Korea will issue RG, and the issued RG will receive special guarantees from the Credit Guarantee Fund or the Export-Import Bank of Korea.
The Credit Guarantee Fund plans to expand the support target of its current RG special guarantee product (85% guarantee ratio), which is operated for domestic use, to include exports and also increase the support limit. The Export-Import Bank will provide customized RG special guarantee products (95% coverage rate), taking into account the management environment of small shipyards.
Previously, the government announced on June 12 that 12 financial institutions would supply 15 trillion won in RG, and the top five commercial banks would resume the issuance of RG for medium-sized shipyards for the first time in 11 years, among other measures to strengthen financial support for the shipbuilding industry.
Meanwhile, large shipbuilders, including Korea Development Bank, Korea Export-Import Bank, and the top five commercial banks, issued RG worth $10.1 billion to the three Hyundai Heavy Industries companies and Samsung Heavy Industries, currently exhausting 65% of the limit. The Financial Services Commission plans to provide additional limits through interbank consultations if further limit exhaustion is anticipated.
For medium-sized shipyards, Industrial Bank of Korea and the top five commercial banks, along with three regional banks, issued RG worth $260 million to Daehan Shipbuilding and K Shipbuilding, while Korea Development Bank also issued RG worth $530 million to these companies.