South Korea has announced on October 31, 2016 that it has made plans to create a state-backed ship financing company to recover the ailing industry on which it heavily relies, reported Reuters.
The company will begin with a capital of approximately US$870 million to invest in the recovery of the country’s shipping companies, but in the future it is planning to invest around $5.6 billion.
Since the collapse of Hanjin Shipping on August 31, 2016, the shipping industry has been attempting to recover from a long market slump due to oversupply.
One of the main ways the industry has been tackling the issues it is facing is by scrapping younger and younger ships, Maersk has recently battled controversy surrounding its decommissioned ships being scrapped in ways unsafe to the environment and local people.
A report by the International Monetary Fund (IMF) published on October 23, 2016, stated that the cost of saving the South Korean shipbuilding and shipping industries is approximately US$27.3 billion.
The conditions of this prediction coming true are that the creditor’s debt restructuring losses reach 5.5 percent to 7.5 percent of GDP alongside along 0.4 to 0.9% of the labour forces employment impact.