South Korea’s financial regulator said Friday it will encourage private banks to increase ship financing, as part of its efforts to improve the financial health of local shipbuilders.
Yoon Suk-heun, governor of the Financial Supervisory Service (FSS), made the remarks at a conference on the shipping and shipbuilding industries, which was held in Busan, the nation’s largest port city.
“Regulations on marine finance are rapidly generating new demand for ship finance, but policy loans alone are not enough to satisfy the growing demand,” Yoon said, according to a statement released by the FSS.
Yoon asked the private sector to take the lead to establish a viable system for ship financing, and stressed that the FSS would help to facilitate financing not only from ship finance but also from capital markets.
In 2015, South Korea provided a total of 4.1 trillion won (US$3.4 billion) in ship financing, but state-run banks accounted for a whopping 91 percent of the financing, Yoon said.
Last November, the government unveiled a package of measures to help ease the hardships of small- and mid-sized shipbuilders that were struggling from a lack of new orders.
The shipbuilding industry, once a cornerstone of the South Korea’s economic growth and job creation, has been reeling from mounting losses caused by an industrywide slump and increased costs.
Recently, South Korea’s three major shipyards — Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. — have enjoyed a rise in new orders, but smaller players are still struggling.
The measures called for the government and private companies to place orders for a combined 140 vessels powered by liquefied natural gas by 2025, including two this year.