[2020 National Audit] Korea Ocean Business Corporation Supports HMM with 4 Trillion Won... 141 Times More Than Small and Medium Shipping Companies
[Asia Economy Reporter Lee Kwang-ho] The Korea Marine Promotion Corporation, established to support the domestic shipping industry, has been criticized for providing over 4 trillion won in support to a single company, HMM (formerly Hyundai Merchant Marine), which is considered excessive compared to the support given to small and medium-sized shipping companies.
According to data received by Rep. Choi In-ho of the Democratic Party of Korea from the Korea Marine Promotion Corporation on the 20th, as of the end of September 2020, the total support amount provided by the corporation to 82 companies was 6.504 trillion won, with HMM receiving 4.128 trillion won, accounting for 63% of the total.
The support details for HMM include corporate bond purchases amounting to 2.2038 trillion won, ship investment and guarantees of 1.251 trillion won, container box leases of 372.9 billion won, eco-friendly ships at 79.7 billion won, and port terminal investments of 70 billion won.
The remaining 81 small and medium-sized shipping companies received a total of 2.376 trillion won, with an average support amount of 29.3 billion won per company. The support amount for HMM is 141 times the average support amount (29.3 billion won) for small and medium-sized shipping companies.
The capital adequacy ratio (RSC), which indicates the corporation’s financial support capacity, is expected to sharply decline from 856% in 2018, two years after the corporation’s establishment, to 332% by the end of 2020. This is lower compared to similar institutions such as the Korea Housing Finance Corporation (466%) and Seoul Guarantee Insurance (405%).
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Rep. Choi stated, "It is excessive that the Korea Marine Promotion Corporation provides 63% of its total support amount to a single company, HMM, and supports it at 141 times the average amount given to small and medium-sized shipping companies. There is an urgent need to prepare support measures for small and medium-sized shipping companies struggling due to the COVID-19 crisis."
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