Government Supports Policy for Replacing Aging Ferries and Passenger Ships... 100 Billion KRW Special Program Introduced from July

147 Vessels of 5 Tons or More Passenger and Freight Ferries to Be Decommissioned Over 3 Years Starting February Next Year When Ship Age System Applies for Shipbuilding Fund Support

[Asia Economy Reporter Lim Cheol-young] The Ministry of the Interior and Safety announced on the 3rd that it will strengthen government support to assist businesses facing difficulties in constructing new vessels to replace aging passenger and cargo ferries due to business downturns caused by COVID-19. Starting February next year, the vessel age system, which mandates the decommissioning of steel passenger and cargo ferries that have been in operation for over 30 years, will be fully implemented.

The Ministry of the Interior and Safety considered the recent worsening of business conditions for ferry operators, including a sharp decline in sales due to the prolonged COVID-19 pandemic, which made it difficult to secure financing from financial institutions for vessel construction. After gathering field opinions through meetings with the Ferry Association and consulting related agencies, it decided to introduce a special program worth 100 billion KRW from July to provide support.

The target for vessel construction funding support includes 147 passenger and cargo ferries over 5 tons that will be decommissioned within three years starting from February next year when the vessel age system is applied. The Ministry plans to focus on the modernization of ferries within the next 2 to 3 years. Funding applications can be made through nationwide branches of the Korea Credit Guarantee Fund, which will issue credit guarantees covering 50% of the vessel construction costs after screening, and loans of up to 80% will be available depending on the company's credit rating.

Through this program, the smooth construction of new vessels is expected to significantly alleviate difficulties faced by ferry businesses, strengthen vessel safety through the replacement and modernization of aging ships, and ensure the stable establishment of the ferry vessel age system.

The Ministry of the Interior and Safety plans to support the smooth implementation of the ferry vessel age system by collaborating with the Korea Coast Guard and local governments to hold on-site briefing sessions. Additionally, it will work with related agencies to promote institutional improvements such as the supply of tax-exempt fuel for inland waterway ferries and the expansion of subsidy providers for passenger and cargo ferries through legislative amendments.

Minister Lee Sang-min stated, “Strengthening vessel safety and providing better services to passengers require the smooth replacement of aging vessels,” adding, “We hope this special funding supply will provide some help to ferry businesses struggling due to COVID-19.”

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