Choo Kyung-ho: "Establishing a Safety Net for Domestic Shipping Companies Worth Up to 3 Trillion Won"

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is presiding over the Emergency Economic Ministers' Meeting held at the Government Seoul Office Building on November 4, 2022. Photo by Yonhap News

[Asia Economy Sejong=Reporter Son Seonhee] On the 4th, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho announced, "In preparation for a downturn in the shipping industry, we will establish a crisis response fund of up to 1 trillion won and provide special guarantees for small and medium-sized shipping companies' vessels, creating a safety net worth up to 3 trillion won for domestic shipping companies."

Deputy Prime Minister Choo chaired an emergency economic ministers' meeting at the Government Seoul Office that morning and discussed the "Measures to Strengthen the Competitiveness of the Shipping Industry" with the above content. He pointed out, "Our shipping industry maintained a boom during the COVID-19 pandemic period due to an unusual rise in shipping freight rates, but recently, concerns about a global economic recession have caused freight rates to fall and cargo volumes to decrease, raising worries about the future market conditions."

In response, Deputy Prime Minister Choo said, "We will also advance the market analysis and response system to closely respond to changes in shipping market conditions," adding, "To make accurate market judgments, we will develop a Korean-style freight index and establish a customized crisis response system by ship type, route, and scale."

He further added, "To fundamentally enhance the competitiveness of the shipping industry, we will expand the growth base such as revitalizing private ship investments and also increase support for technology development for eco-friendly and digital transformation."

At the meeting, measures to revitalize venture investment, which has recently shrunk sharply, were also discussed.

Deputy Prime Minister Choo explained the policy background, saying, "Venture investment showed a high growth rate until the first half of this year, but investment has been shrinking recently due to worsening domestic and international economic conditions. There is also a structural problem of high dependence on policy finance and low private risky investment." In fact, venture investment amounts sharply contracted, from 892.9 billion won in the first quarter (compared to the same period last year) to 5.8 billion won in the second quarter, and then recorded a negative 838.7 billion won in the third quarter.

Deputy Prime Minister Choo said, "In response to the contraction of venture investment sentiment due to the recent expansion of domestic and international uncertainties, we will strengthen the role of policy funds," adding, "We will apply incentives such as additional management fees to government mother fund operators who achieve investment target ratios, and to promote private investment, we will raise the mother fund's priority loss coverage ratio from 10% to 15% for investment losses."

He also stated, "We will promptly establish the legal basis for private venture mother funds and strengthen tax incentives throughout the entire process of investment, operation, and recovery," and "We plan to grant a 5% corporate tax credit on venture company investment amounts and an additional 3% credit on increased investments to domestic corporations investing in private venture mother funds, and a 10% income deduction benefit to individuals."

Deputy Prime Minister Choo added, "We will also pursue exemption from value-added tax on asset management and operation by mother fund operators during the operation stage, and provide non-taxation benefits on capital gains from venture company equity transfers when individual investors and mother fund operators recover their investments."

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