A shipping industry stranded in a crisis is demanding practical support countermeasures from the Korean government and financial institutes.
Members of the Korea Shipowners’ Association gathered in Seoul’s Yeouido Maritime Building on September 12. They agreed that, considering the gravity of the threat the shipping industry is facing, it is in urgent need of government support. On September 13, they announced that they decided to propose countermeasures to the government, National Assembly, and financial institutions.
Many shipping company CEOs believe that government plans such as the maritime guarantee fund, establishment of the Ship Finance Corporation, and normalization of corporate bonds have limited effectiveness or are being delayed in execution. They have had little practical help to the shipping industry that’s going through a crisis. A lot of CEOs are demanding more active and practical countermeasures.
Major shipping companies like STX Pan Ocean and Korea Line Corporation have entered a corporate rehabilitation procedure (court receivership) due to lower sales led by worsening market conditions. The liquidity issue in the shipping industry is already serious, and is in urgent need of prompt support.
The establishment of a Ship Finance Corporation was President Park Geun-hye’s campaign pledge. Yet, it is in danger of being abandoned for reasons such as the possibility of a World Trade Organization (WTO) dispute. A maritime guarantee fund was expected to ameliorate the liquidity issues in the shipping industry, but government institutions such as the Financial Services Commission will only review the feasibility of the establishment after a study is completed in 1H 2014.
“Considering the liquidity problems the shipping industry is facing at the present time, establishment of maritime guarantee fund will be more effective sooner than later. If the preparation takes too long, it may lose effectiveness altogether,” emphasized the Korea Shipowners’ Association on the importance of prompt establishment.
“In the case of the corporate bonds normalization plan, 30 shipping companies that have applied all failed to pass the evaluation by the Korea Credit Guarantee Fund. The regulations are too strict and commercial papers that are similar to corporate bonds are excluded from the support target, limiting its effectiveness. Relaxation of evaluation regulations and prompt input of resources is necessary,” the Association continued to pass on the voice of the industry.