Seoul offers USD690 million loans to replace aging ships

The Sewol ferry, lifted from where it sank in the country's southwestern waters, is brought to port in Mokpo, South Korea. Credit: EPA Photo

The Ministry of Oceans and Fisheries (MOF) of South Korea is initiating loans of KRW820 billion (USD690 million) to encourage owners of elderly coastal merchant ships and ferries to order new ship replacements.

The MOF said, “This plan aims to strengthen maritime safety and competitiveness in cargo transportation.”

The idea is to build 21 ferries or passenger ships at a cost of KRW29 billion each, and 38 coastal merchant ships at a cost of KRW5.6 billion each.

Ship safety in South Korea has been in the spotlight since the capsizing of the Sewol ferry in April 2014 and the sinking of the ore carrier Stellar Daisy in March 2017.

The funding will come from the state-backed ship financial institution Korea Ocean Business Corporation (KOBC). The money is an ongoing scheme organised by another policy lender, Korea Development Bank (KDB).

South Korea’s shipping companies have also been plagued by financial crises, with Hanjin Shipping collapsing in February 2017.

KDB and KOBC will invite applications from shipowners in March and September 2020, and suitable applicants will be granted the loans.