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Refund Guarantees to Be Allowed for Non-large Shipbuilders in Korea

,Sungdong Shipbuilding & Marine Engineering

Sungdong Shipbuilding & Marine Engineering and STX Offshore & Shipbuilding are expected to benefit from the resumption of providing refund guarantees.

The Export-Import Bank of Korea announced on May 30 that it would make it easier for small and medium-sized shipbuilders in South Korea to be provided with refund guarantees. “This means job creation and maintenance will also be examined as factors determining the issuance or non-issuance of refund guarantees whereas the determination has been based solely on profitability assessment so far,” said an industry source.

A refund guarantee is for a financial institution providing it, such as a bank, to return prepaid expenses to a shipowner in place of a shipbuilder in a case where the shipbuilder goes under or fails to deliver its ship to the shipowner.

As mentioned above, the Export-Import Bank of Korea is planning to look into not only shipbuilders’ profitability but also their positive effects on regional economies following the signing of contracts in making the determination. This change in policy was reported to the government on May 30 and the issuance for small and medium-sized shipbuilders is likely to be resumed soon.

Sungdong Shipbuilding & Marine Engineering and STX Offshore & Shipbuilding are expected to benefit from the resumption. The former recently signed a final contract with Kyklades Maritime Corporation, a Greek shipowner, to build and deliver seven oil tankers. The latter, in the meantime, is currently in receivership and its ship delivery is scheduled to be completed in January next year.

The Original Posted by Jung Min-hee/Business Korea

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