The Ministry of Land, Transportation and Maritime Affairs of Korea has announced on February 21 that it decided to support coastal shipping companies by providing ship financing and held a signing ceremony to support modernization of coastal ships with the National Federation of Fisheries Cooperatives and the Korea Shipping Association.

Officials from the Ministry of Land, Transportation and Maritime Affairs, the National Federation of Fisheries Cooperatives and the Korea Shipping Association attended the ceremony and decided to build close cooperation system among the institutions for successful work to modernize coastal vessels.

The project is to encourage coastal shipowners to exchange aged vessels to new ones, backed by governmental support on an interest of loan fund for shipbuilding, and boost shipowners’ competitiveness and maritime safety.

The National Federation of Fisheries Cooperatives is said to be in charge of lending operation for shipowners (with 5.2% of interest rate and 60% of Loan-to-Ship Value ratio) and the Korea Shipping Association is to manage the overall operation, such as choosing shipowners, etc. Also, the Ministry of Land, Transportation and Maritime Affairs is said to support with policies, such as providing fund for interest rate gap subsidization.

Accordingly, the coastal shipowners will be capable of making use of fund for shipbuilding within KRW 30bn ($27m) worth of annual limit with a 3%-lowered interest rate. Thus, they will be able to expedite modernization of vessels and also, from a societal perspective, the project will ultimately reduce non-operation expenses largely through securing maritime safety.

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Published : February 22, 2013