The Export-Import Bank of Korea decided to provide 150 billion won in refund guarantees (RG) for advance payments to mid-sized shipbuilders whose management has normalized. It is the first time in about three years since 2022 that RG support is being resumed.
According to the financial sector on the 21st, Hwang Gi-yeon, head of The Export-Import Bank of Korea, expressed this position during a visit on the 19th to K Shipbuilding Co., Ltd. (formerly STX Offshore & Shipbuilding), a mid-sized shipbuilder in Changwon, South Gyeongsang, and to Young Poong Electronics, a strong defense industry parts small giant.
Hwang said, "Shipbuilding accounts for a large share of Korea's exports and makes a significant contribution to local economies and job creation," and added, "For mid-sized shipbuilders whose management has normalized after past restructuring, we will expand strategic financial support to strengthen order competitiveness and the industrial ecosystem."
He continued, "Young Poong Electronics is actively engaging in sales activities to meet demand in Europe, including completing its second plant," and said, "We will focus on supporting leading small and mid-sized local companies to fulfill the role of policy finance, including creating quality jobs and driving local economic revitalization."
An RG is a guarantee in which a financial institution promises to refund the advance payment to the shipowner if the shipbuilder fails to deliver the vessel for various reasons, including default. Because shipowners typically demand the issuance of an RG when signing a contract, it is regarded as an essential condition. However, the Export-Import Bank halted RG issuance starting in 2022, citing controversy over potential insolvency stemming from shipbuilders' low-priced orders.