S. Korea expands funding, support for local shipbuilders

South Korea will expand financial support measures and invest 180 billion won ($135.9 million) in technological development for autonomous vessels and eco-friendly ships to cement local shipbuilders' top position in the global market, the Trade Ministry said Wednesday.

Marking the first anniversary of the Yoon Suk Yeol administration, Trade Minister Lee Chang-yang traveled to Ulsan to inspect the shipyards there and go over past achievements.

In addition to announcing financial support plans to boost the industry, Lee attended the naming ceremony of the country's first liquefied natural gas bunkering ship equipped with a homegrown KC-2 cargo design.

Blue Whale, which implements the advanced Korean type KC-2 cargo design for the first time, was constructed at the dockyard of Hyundai Heavy Industries in Ulsan for three years from 2020 at a cost of 55.3 billion won.

"The world has a close eye on our shipbuilders' technology and manufacturing capability, and the business environment is changing favorable to us, with ship prices rising and more demand for environment-friendly vessels," Lee said.

"At the same time, we are challenged with China's technological pursuits and Europe's strong future mobility technology. The government will spare no effort to support the industry's rebound and for market leadership in the future," he added.

The large-scale investment announced Wednesday will help fund ships with alternate energy sources such as hydrogen, ammonia and electricity.

In the January-March period this year, South Korea’s shipbuilding industry secured 40 percent of the total value of orders made to top the global market. Korean shipbuilders also bagged a record volume of 38.68 million compensated gross tonnage, according to the ministry.

Korean shipbuilders are also leading the world’s high-value, environment friendly ship market, taking 70 percent of the market volume in the first quarter this year. The country has seized the global market for large-size LNG carriers, securing contracts of 17 out of 19 ships ordered, the ministry added.

The ministry predicted Korea’s shipbuilding industry will witness its exports grow by 18 percent to $21.5 billion in 2023 compared to the year before. With rising prices and local shipbuilders bagging major orders, profitability will also go up, the ministry added.

To support the industry's growth, the government will implement additional financial measures to expand refund guarantees, the minister said.

Under the plan, the government will add three more issuing organizations including Seoul Guarantee Insurance, and also allow additional refund guarantees to large shipbuilders that maxed out on their limits.

While financial institutions and commercial banks have actively issued refund guarantees to aid shipbuilders secure contracts, the ministry said it found expanding financial aid as necessary to back the rising number of orders.

Recognizing that the industry would need about 14,000 additional workers this year, the ministry explained it has been working with the industry and related ministries to secure about 5,500 workers, including foreigners.

“We will resolve the labor shortage problem quickly. I will make sure we do not face a situation where we cannot build ships due to a workforce shortage when orders are increasing," the industry minister said, adding that 5,500 additional workers were secured to relieve the situation.