SEOUL, The government and financial firms agreed to set up a 1 trillion-won (US$723 million) reserve to issue refund guarantees (RGs) for midsized shipbuilders, officials said Monday.
It marked the first time in 11 years that banks have resumed issuing RGs to midsized shipbuilders, following significant losses they incurred during an industry slump, according to the Ministry of Trade, Industry and Energy.
Separately, the government and financial firms agreed to issue 14 trillion won worth of RGs for big shipbuilders, officials said.
The latest decision came in line with efforts to maintain the growth momentum in the local shipbuilding industry. South Korea’s exports of ships came to $10.4 billion over the January-May period, up 57 percent from a year earlier.
RG is a form of security for the ship purchaser, who usually makes advance payments on an order. In case the ordered vessel cannot be delivered, the bank that has taken on the guarantee of the shipbuilder would make the refund.
“In order to bolster
the industrial ecosystem to maintain the country’s lead in the global shipbuilding sector, shared growth among major and medium shipbuilders is important,” Industry Minister Ahn Duk-geun said in a statement.
Source: Yonhap News Agency
