Financial Institution for Ship Investment to be Improved

Financial Institution for Ship Investment to be Improved

Improvement of the Ship Finance Scheme, such as the amendment of the Ship Investment Company Act, will be undertaken with an aim to secure vessels of Korean shipping companies.

At an economic coordination meeting held on Feb 2, 2007, the Korean government confirmed a ?rogram to strengthen competitiveness in the industry of international maritime logistics service? which was designed to reinforce competitiveness of the maritime logistics industry and continued growth.

This scheme, established in cooperation with relevant ministries including the Ministry of Maritime Affairs and Fisheries (MOMAF), was undertaken to respond to changes of external conditions such as oligopoly of the international logistics market accompanied by the market expansion, and facilities improvement by global maritime logistics businesses.

First of all, Korea plans to reform the ship investment company scheme, introduced in 2004, in order to ensure vessels, and support the quantitative expansion of shipping companies through boosting the use of vessel funds by shipping service providers and promoting influx of funds in the market.

To this end, the government will amend the Ship Investment Company Act, easing a mandate of five-year duration of the vessel funds, ban on outside work of fund management companies, and a limit of a number of vessels (one ship) per fund.

The introduction of a ?alvage value guarantee system?will also be undertaken, which estimates and guarantees the residual value of a ship so that floating funds in the market flows in the form of vessel investment.

In line with improvement of systems, a financial support scheme for ensuring ships will be set up in order to enlarge the scope and scale of the vessel support funds for coastal shipping enterprises. The scheme will help respond to an increase in the number of aged vessels which need to be replaced with new ones.