Government Provides 820 Billion KRW Support for Replacement of Aging Coastal Passenger and Cargo Ships
[Asia Economy Reporter Kim Hyo-jin] The government has decided to invest 820 billion KRW in the modernization of aging coastal passenger and cargo vessels.
On the 5th, the Financial Services Commission announced that, together with the Ministry of Oceans and Fisheries and KDB Industrial Bank, it has established and will operate a policy finance program to support the construction of new passenger and cargo vessels. The support targets aging coastal passenger and cargo vessels with demand for replacement due to aging, prioritizing vessels nearing their age limit.
Coastal passenger vessels can operate up to 20 years of age, with possible one-year extensions. Ferries can operate up to a maximum of 25 years. For domestic cargo vessels, new registrations for cargo transport businesses are restricted for vessels exceeding 15 years of age.
Based on demand surveys, the government has prepared a support plan worth approximately 820 billion KRW, including 608.9 billion KRW for coastal passenger vessels (21 vessels) and 201.42 billion KRW for domestic cargo vessels (38 vessels).
Sixty percent of the new construction cost will be raised as senior loans through private financial institutions, with the Korea Ocean Business Corporation providing a 95% guarantee on the funds. Twenty percent of the cost will be raised through subordinated funds from the Industrial Bank of Korea. The remaining 20% must be borne by the shipping companies themselves.
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To reduce the burden on shipping companies, long-term financing support with a maturity of 16 years will be provided. The Industrial Bank of Korea and the Korea Ocean Business Corporation will form a support target review committee composed of external experts to select the recipients of support. The business plans will be announced on the websites of the Industrial Bank of Korea and the Korea Ocean Business Corporation in March and September of this year.
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