The South Korean government will invest 1.35 trillion won ($1.2 billion) in Korean Ocean Business Corp., a state entity launched earlier this month to support local shipping industry reeling from a lengthy global slump, through stock contribution.
The Ministry of Maritime Affairs and Fisheries said Tuesday that the Cabinet has approved a plan to allocate government stakes of 12.7 percent in each of the country’s four port authorities - Busan, Ulsan, Incheon, and Yeosu Gwangyang under Korean Ocean Business Corp. The in-kind investment will amount to 1.35 trillion won, brining up its capital base to 3.1 trillion won as initially planned.
Korean Ocean Business was launched on July 5, more than a year after the government proposed setting up the company to reinvigorate the country’s ailing shippers, with initial capital base of 3.1 trillion won (statutory capital 5 trillion). The government is to finance 50 percent or 1.55 trillion won - 200 billion won in cash and 13.5 billion won in-kind while the private sector is to contribute for the remaining 1.55 trillion won.
The government already has contributed 130 billion won in cash and has set aside 70 billion won from its next year’s budget for Korean Ocean Business. Private sector’s contribution of 1.55 trillion won will be made after conducting equity valuation.
The Korean government has sought ways to restore the reputation of local shipping and shipbuilding industries struggling from the protracted global slump as well as the collapse of the country’s once leading container carrier Hanjin Shipping in 2016. In April, it unveiled a five-year plan for reviving home-grown shippers, which includes aiding local shipping companies in placing orders for new vessels with local shipyards through Korean Ocean Business. The state-entity will also support shippers through guarantees on their ship purchases.
Having nearly completed raising its initial capital, the state-sponsored financing program for shippers is expected to pick up speed soon, said a maritime ministry official.
By Moon Jae-yong and Cho Jeehyun
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