In a bid to prevent losses from shipbuilding contracts that are not generating sufficient profits, the South Korean government has announced that it will be carrying out profitability checks on the countries shipbuilders, according to Splash247.
Choi Kyung-hwan, Finance Minister for South Korea, said shipyards will not receive financial backing if they take on contracts that will not deliver any profits.
Choi said: “Money losing projects can put pressure on financial institutions and if lenders are seriously hurt, this can be a burden for the economy as a whole. There is a need to fundamentally tackle this problem.”
Choi added that it is the responsibility of financial institutions to check the profitability of contracts.
Shipbuilding has been a hazardous industry in recent months, after multiple incidents were reported, involving the deaths of shipyard workers as a result of explosions on-board ships.
However, the investment available for the shipping industry looks to be increasing after Shanghai Waigaoqiao Shipbuilding recently announced that it had received US$2.8 billion in credit facilities in order to help it build higher specification ships.
