South Korean Finance Minister Kim Dong-yeon said the government will designate five key shipbuilding regions on the country’s south coast as “industry crisis” zones eligible for economic support.
The areas include Dong-gu in the city of Ulsan, Geoje-si of Kyong-nam province and Jinhae-gu of Changwon, as well as Tongyeong and Mokpo in the southwest coast.
These areas are home to heavy shipping and shipbuilding companies and have struggled with high unemployment in recent years.
A copy of the minister’s speech released from the ministry showed the government would provide financial and tax incentives for suppliers of shipbuilding companies in the designated regions. The government will also provide job training to people made unemployed through recent restructuring to boost their re-hiring or full-time employment prospects.
“Support will be made on product enhancement efforts for shipbuilding and auto industries in the designated regions, and help will also go to developing tourism infrastructure using local attractions,” Kim told other ministers in a policy meeting in Seoul.
South Korea’s shipbuilding and shipping companies have undergone massive restructuring in recent years amid a slowdown in global demand and rising competition from China.
These heavy industries, which helped propel South Korea’s growth in past decades, have cut tens of thousands of jobs, hurting local economies and households.
The statement did not provide details on the timing or amounts of public support to be allocated.
Sunk by drastic cuts in orders from customers hit by the 2008 financial crisis, South Korea’s shipping landscape has been littered with bankruptcies and billion-dollar losses.
But some, like Busan’s DSME, are adding innovation to craftsmanship to tap new demand for nimbler ships and offshore energy platforms.
The stakes are high for South Korea, jostling with Japan and China to lead an industry revival.
Global orders – the trio account for four of every five merchant vessels built – grew nearly two-thirds during the first nine months of the year from a year earlier, according to shipping research firm Clarkson.
In September of last year alone, South Korean yards bagged half the business, Clarkson’s data shows.
The crisis hit bottom earlier last year with the bankruptcy of Korea’s Hanjin, one of the world’s biggest shipping companies.
Tens of thousands of employees work day and night at South Korea’s big three shipyards – Hyundai Heavy Industries, Samsung Heavy Industries and DSME – building dozens of mega-tankers, container giants and huge oil and gas production platforms at once.
Based on the southeastern tip of South Korea, at the confluence of the Yellow Sea and waters off the east of the Korean peninsula, the trio has racked up billions of dollars in losses, prompting major restructuring in the face of stiff competition from its Chinese and Japanese rivals.
The years of pain have made innovation all the more essential.
Improving shipping efficiency or even switching to cleaner fuels like liquefied natural gas (LNG) is necessary to comply with regulation coming into effect from 2020 by the International Maritime Organization (IMO).
The Origianl Posted by Malaya Business Insight