South Korea's government and public entities will place orders for more than 250 ships, worth about 11 trillion won ($9.59 billion), with domestic shipyards by 2020 as part of a plan to stimulate the ailing shipbuilding sector, its finance minister said Monday.

The government's industrial restructuring measures, finalized at a meeting of economy-related ministers, also call for upgrading the competitiveness and profitability of the shipping industry as well as shipyards, as the two sectors have been suffering from massive losses due to a global slowdown and contracting demand, Finance Minister Yoo Il-ho said.


The government will lead shipbuilders to shift their focus to higher value-added ship services and extend as much as 6.5 trillion won in fresh financing to help boost shipping companies' competitiveness, the minister said.

"The world's shipbuilding industry is expected to suffer shrinking demand until 2020," Yoo said at the ministerial-level meeting in Seoul. "In order to deal with an order shortage, the government will help shipyards receive new orders for 250 or more vessels, worth 11 trillion won, by 2020 from the public sector."

He said the government will also push the firms to reorganize their business portfolios in the longer term, focusing on higher value-added ship services.

The top economic policymaker noted that Daewoo Shipbuilding & Marine Engineering Co., which has been under a creditor-led workout program, will seek a new owner after undergoing strict downsizing and managerial reform.

"They will make efforts to work on advanced vessels that are environment-friendly and services like ship maintenance and design," said Yoo.

The government will also spend 1.7 trillion won by 2017 to help stabilize the management of ailing shipyards scattered along the nation's coastal areas while injecting an additional 1 trillion won over the next five years to create various public works projects in the affected coastal areas.

The 6.5 trillion won financing program for the shipping industry has come as the collapse of Hanjin Shipping Co., South Korea's No. 1 shipper, has caused a worldwide logistics disruption and a drop in cargo handled at the country's seaports.

"The government has made constant efforts to push forward with corporate restructuring and structural reform," said the finance minister. "The government will keep close tabs on the companies to have them comply with the restructuring program." (Yonhap)