Government Provides 11 Billion KRW Support to Coastal Passenger Ship Companies Hit Hard by COVID-19

50 Billion Deficit Payment and 6 Billion Loan Repayment Deferred for 1 Year

[Sejong=Asia Economy Reporter Moon Chaeseok] The Ministry of Oceans and Fisheries announced on the 1st a support plan worth 11 billion KRW for coastal passenger shipping companies struggling due to the spread of COVID-19.

First, to increase support for operating deficits, 5 billion KRW was secured through the first supplementary budget. If a deficit occurs again this year on general routes that recorded losses last year, part of the deficit will be compensated. Previously, support for part of the deficit was provided only when a deficit occurred for the third consecutive year on routes that had losses for two consecutive years, but the scope has been temporarily expanded. General routes refer to routes operated by private shipping companies deploying their own vessels without government support. Since island areas lack alternative transportation unlike land areas, shipping companies had to operate while bearing operating deficits.

The Ministry of Oceans and Fisheries plans to select eligible routes and operators based on this year's deficit between April and May, then accept applications based on the deficit incurred over six months from December last year to next month. After review in June, 70% of 20% of the annual deficit subsidy will be paid in advance. A ministry official explained, "We expect to prevent the suspension of passenger ship operations, which are the only means of transportation for island residents, due to the worsening management of passenger shipping companies."

Additionally, for passenger shipping companies that must repay shipbuilding loans this year, repayment will be deferred for one year and interest will be supported with 6 billion KRW. Currently, when passenger shipping companies borrow shipbuilding funds from financial institutions, the government supports about 2.5% of the loan interest rate, but deferral will be granted only if the loan must be repaid this year. The ministry expects 15 companies to benefit from this during the year. If the loan amount is 5 billion KRW or less, repayment to the government must be made over 15 years; if it exceeds 5 billion KRW, repayment must be made over 8 to 10 years.

Byun Hyejung, Director of Coastal Shipping at the Ministry of Oceans and Fisheries, said, "In addition to this support plan, we are reviewing additional measures to support passenger shipping companies, including advance payment of other subsidies such as national subsidy route fare support," adding, "We will make policy efforts to secure stable transportation rights for island residents."

This content was produced with the assistance of AI translation services.