South Korea is stepping in to assist its shipbuilding sector by providing refund guarantee support worth KRW15 trillion (approximately $10.85bn) to shipbuilders. A meeting was held by the Financial Services Commission (FSC) chairman Kim Joo-hyun with key shipbuilders and financial companies where an agreement was signed on June 17.
In a significant move to bolster South Korea’s shipbuilding industry, the Financial Services Commission and the Ministry of Trade, Industry and Energy held a meeting with major shipbuilders and financial institutions to have talks on expanding export financing support for the shipbuilding industry.
During the meeting, measures to expand refund guarantee for shipbuilding contracts have been introduced through which 12 major banks and policy financial institutions will make available export financing support worth about KRW15 trillion (approximately $10.85bn) to shipbuilders in the form of refund guarantees.
With the recent rebound in the shipbuilding industry, five major banks will resume providing refund guarantees to mid-sized shipbuilders for the first time in eleven years.
With the agreement signed, Korea Trade Insurance Corporation will increase the guarantee ratio on refund guarantees from the previous level of 85 percent to 95 percent, which in turn will help to lower the guarantee burden on banks from the previous level of 15 percent to 5 percent.
At the beginning of the meeting, FSC Chairman Kim Joo-hyun delivered opening remarks highlighting the significance that commercial banks are now able to resume the issuance of refund guarantees to shipbuilders.
Chairman Kim added that the financial authorities will continue to closely communicate with industry officials to help resolve difficulties.
