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Taxpayers’ Money to be Poured Again into Shipbuilding Industry

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Criticisms are mounting as the government is planning to pour taxpayers’ money yet again into the shipbuilding industry, which is currently under restructuring.

The South Korean government is planning to place orders for new ships with a total value of 5.5 trillion won (US$5 billion) and help local shipbuilders hire 3,000 persons on an annual average basis by helping mitigate their financial burden. Criticisms are mounting as the government is planning to pour taxpayers’ money yet again into the shipbuilding industry, which is currently under restructuring.

On April 5, the government announced that it would consider selling Daewoo Shipbuilding & Marine Engineering on a long-term basis while continuing to restructure STX Offshore & Shipbuilding and stabilize the business of Sungdong Shipbuilding. In addition, the Defense Acquisition Program Administration, the Ministry of Oceans & Fisheries, the Korea Customs Service and so on are going to place orders for at least 40 ships until next year, the government is going to invest approximately eight trillion won until 2020 for the placement of at least 200 orders by local private shipping companies so that shipbuilders can have more work to do, and the government is going to place a couple of orders each year for ships running on LNG.

Its plan for new employment to continue until 2022 is based on design and production technique development optimized for smaller shipbuilders, development of self-navigating and eco-friendly ships, extension of employment support programs, a new council for cooperation among the shipbuilding, shipping and financial sectors.

Those in the industry, in the meantime, are questioning how the government will increase employment in the sector that is currently going through restructuring. They are also criticizing the government as lacking a sense of urgency with regard to the sale of Daewoo Shipbuilding & Marine Engineering, into which more than 20 trillion won has already been poured from taxpayers’ pockets.

They also pointed out that the new orders for 40 or more ships are not enough for any shipbuilding business recovery in that South Korean shipbuilders’ sales totaled 48.8320 trillion won as of the end of 2016 and the amount of orders they received accounted for no more than 19.1% of the global total as of the end of 2017.

The Original Posted by Choi Mun-hee/Business Korea

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