By Kim Yoo-chul
The Korea Chamber of Commerce and Industry (KCCI), the nation’s leading business lobby, asked the government Friday to actively support the ailing local shipbuilding industry by expanding finance programs for it.
This is the first time an influential lobby group has issued a statement asking for immediate help for the troubled shipbuilding industry.
“Korean firms are fast losing their competitive edge over their Chinese rivals. The shipbuilding industries are falling down and many large and medium-sized shipbuilders are being cornered to fold up their businesses,” the statement said.
Korean shipbuilders saw exports decrease by around 30 percent on-year in 2012 while their Chinese and Japanese rivals posted drops of only 10.3 percent and 14.6 percent, respectively.
Total exports by Korean shipbuilders reached $37.8 billion in 2012, compared to China's $39.2 billion.
It was the first time in 11 years that Korea lost its status as the world’s largest shipbuilding exporter.
The KCCI said the Chinese government is actively helping its shipbuilding industry, but the Korean government is not.
“Last September, Korea declared it would support a total of 4 trillion won to help the local shipbuilding industry. But the plan has so far failed to materialize. It is not understandable,” the KCCI said.
The country’s troubled shipping and shipbuilding industries are hoping President Park Geun-hye’s pledge to set up a state-run ship financing institution will save them. Sources say the country’s largest port city of Busan may be home to the institution, if it is established.
Lawmakers are holding talks with state-run lenders and financing firms to set up a blueprint for the proposed institution, which may be tasked with providing loans to and buying ships from cash-strapped owners. It will also make it easier and less costly for shipping firms to order new vessels.
“The shipbuilding industry has been one of Korea’s mainstays. Since the mid-2000s, the nation enjoyed a boom and grew to post $54.1 billion in exports in 2011. But China has lately been putting up a strong fight aided by government support,” the KCCI said.
Korea has the world’s top-tier players, such as Hyundai Heavy Industries, Samsung Heavy, Daewoo Shipbuilding and the STX Group.
The industry is one of the nation’s backbones along with the electronics, steel and automaker industries.
“In Korea, shipbuilders spend their money first to build ships. But local banks were very passive in supporting them as the industry is cyclical and volatile. The government needs to urge major local banks to increase their support,’’ the KCCI said.
Those major Korean shipbuilders are scaling back investments on facilities.
STX officials said the world’s fifth-largest shipbuilder will sell more of its core assets for survival, while Hyundai officials admitted that business projects related to the company’s new cash-cows have been stopped or delayed since early this year amid the bearish market.
“That’s why the government needs to stabilize the corporate bonds market by extending maturity and establishing credit guarantee funding for shipbuilders to help them,” said Park Jong-kap, a senior executive at KCCI.
Park stressed that Korean shipbuilders are facing order cancellations from ship owners, though he didn’t elaborate further.