South Korea will exert its strength again in shipbuilding in 2018

Reporter　Xu Miaomiao

A t the beginning of 2018, South Korean President Moon Jae-in put Daewoo Shipbuilding &Marine Engineering as the first spot of his new year inspection tour, and visited the construction site of LNG ice breaking ship. Some media in South Korea reported that the reason for Moon Jae-in to choose the shipyard as his fi rst station is because he had the con fi dence to revive shipbuilding industry in South Korea under the full help of the government.

The shipbuilding industry is very important to both Korean economy and international status of South Korea.Under the background of the slump global shipbuilding in 2016, shipbuilding enterprises in South Korean were also caught up in the dilemma, and Korean shipbuilding industry has been in the extreme cold. This will not only directly affect the industry, but also affect the weak South Korean economy. In May 2017, Moon Jae-in was elected as the new president of South Korea, and he is more aware of the importance of shipbuilding industry as a pillar industry in South Korea. The central and local governments of South Korea have issued a variety of measures according to the conditions of different ship enterprises and supporting enterprises.

According to Cao Bo，the researcher of CSIC economic research center, at the level of central government,as early as February 2016 during the Park Geun-hye administration, in order to promote the optimization of shipbuilding industry and other manufacturing industry restructuring, the South Korean parliament adopted the “special law to improve the vitality of enterprises”. The bill is a package of rules with the restore of the shipbuilding industry, steel industry,automobile, petroleum and chemical industry as the core. In October 2016, the South Korean government has issued two important shipbuilding industry reform plans, i.e. “Strengthening the competitiveness of the shipbuilding industry” and “the plan for the revitalization of the economy of shipbuilding intensive regions”. The two plans clearly pointed out at the same time that the shipbuilding industry is to further reduce the backward production capacity, it should also improve the service ability, develop actively to the whole industry chain combining design, production, after-sales service. At the same time, the plan emphasizes that while reducing production capacity, shipyard should make efforts to readjust its industrial structure, optimize and restructure,improve competitiveness, and occupy the sunrise industry position in advance of its competitors.

At the level of local government, measures such as financial support and tax relief and etc., are actively introduced to save small and medium-sized shipbuilding and supporting industries. At the same time, the government, local financial institutions and related supporting enterprises also jointly develop new products,enhance competitiveness and “huddle together” to overcome difficulties. Local governments also provide skills training for unemployed people, help unemployed people to fi nd jobs etc.

After Moon Jae-in came to power, the government’s support is unprecedented. According to Li Xing of the economic research center of CSSC, judging from the actual implementation of the plan of strengthening shipbuilding industry in 2017, as of September, the new shipbuilding fund has been passed to support Korean shipowners to build 10 VLCC new ships in Korean shipbuilding enterprises. The government also provided a 100 billion KRW (590 million RMB) reserve fund for policy financial institutions, which is used to support policy financial institutions and continue to provide advance payment guarantees for small and medium-sized shipbuilding enterprises.

In December 2017, the South Korean Congress passed a proposal on the formation of a South Korean Marine revitalization company in July 2018. South Korea’s marine revitalization company integrated the scattered financial support institutions such as ship ocean in South Korea and Korean Marine assurance insurance, and mainly provides financial and policy support. Financial support includes shipbuilding investment guarantee, repurchase of second-hand ships and re-renting. Policy support includes shipping trade support, shipping operation support,national essential shipping system and so on.

Li Xing believes that in the short term, in order to cope with the downturn in the next 1～3 years, the government will urge enterprises to speed up the implementation of self-rescue plan, enhance the competitiveness of seizing order, and promote the green ship project and LNG-powered ship demonstration project. In the medium and long term, the first is to continuously enhance the competitiveness of technology and cost, and form the unique competitiveness of South Korea in super large merchant ships, LNG-powered ships and offshore platforms through technological development. The second is to continue to promote green and intelligent ships to cope with the new rules and regulations and industrial revolution, and to support independent support equipment and system onboard real ships. The third is to innovate the mode of cooperation between shipbuilding and shipping, finance, supporting and outsourcing enterprises, forming a virtuous circle of upstream and downstream of the industry.

Cao Bo believes that South Korea will continue to exert strength in the smart ship and environmentally friendly ship on the base of keeping its advantages in original ship type. Meanwhile, South Korea will have good performance in Arctic route and energy development in the future due to its rich experience in building large polar commercial transport ships.