Joseonsa, Advance Payment Refund Guarantee Special Rate Raised from 70% to 85%

The special rate for Refund Guarantee (RG) on advance payments in the shipbuilding industry will be increased from the current 70% to 85%. This measure aims to resolve the situation where shipbuilders are unable to secure orders due to a shortage of RG.

[Image source=Yonhap News]

On the 6th, the Ministry of Trade, Industry and Energy held an 'Emergency Economic Ministers' Meeting and Export Investment Measures Meeting' and announced that they discussed the 'Plan to Expand Financial Support for the Shipbuilding Industry' with this content.

RG is a guarantee provided by banks for advance payments from shipowners, and shipbuilders need RG issuance to receive orders. The Korea Trade Insurance Corporation will expand the special guarantee rate to 85% to increase the participation of commercial banks in issuing RGs.

As orders increase, shipbuilders plan to explore various ways to expand funding to secure resources. The existing RG issuing institutions, Korea Development Bank and Export-Import Bank of Korea, will also review additional RG issuance based on profitability assessments for each order project.

Support will also be provided for orders from large shipbuilders. Financial institutions will issue the remaining RG limits in a timely manner, and if limits are exceeded, eight financial institutions will hold inter-bank consultations to prepare additional burden-sharing plans. Diversification of RG issuance through overseas markets will also be pursued.

The Korea Trade Insurance Corporation will utilize the trade insurance fund for special guarantees to support the expansion of commercial banks' participation in RG issuance.

Efforts for financial support will include a joint project by related ministries such as the Ministry of Trade, Industry and Energy, Ministry of Economy and Finance, and Financial Services Commission to establish guidelines to prevent low-price orders centered on volume and financial sector insolvency.

Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy stated, "With the favorable trend in the global ship market, ship orders are expected to continue increasing," and added, "This year is an important period when past orders can lead to improved performance, so we will create a virtuous cycle for the growth of the shipbuilding industry through active financial support."

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