Alphabiz - South Korea Unveils ‘K-Shipbuilding Vision’ as President Lee Calls for Stronger Government Support

Photo courtesy of Yonhap News

[Alpha Biz= Paul Lee] Lee Jae-myung has called for stronger government support for the shipbuilding industry as South Korean shipyards experience a sharp increase in orders, with the government unveiling a comprehensive “K-Shipbuilding Future Vision” aimed at enhancing global competitiveness.

The announcement came after President Lee visited the shipyard of HD Hyundai Heavy Industries in Ulsan and held a policy meeting on the future of the shipbuilding sector. The visit was attended by key executives, including Chung Kisun, Vice Chairman Lee Sang-kyun of HD Hyundai Heavy Industries, and Vice Chairmen Cho Young-cheol and Cho Seok of HD Hyundai.

During the visit, President Lee toured key production facilities, including block assembly shops, steel plate yards, quays, and docks. He also inspected a 38,000-cubic-meter ammonia carrier currently under construction at the company’s No. 2 dock. HD Hyundai Heavy Industries recently achieved a global first by building an ammonia-powered vessel.

The president further boarded a 174,000-cubic-meter liquefied natural gas (LNG) carrier—one of South Korea’s flagship ship types—to examine its cargo containment system.

Chung Kisun stated that the company will “transform its production structure through the development of smart shipyards and strengthen future competitiveness based on digital innovation.”

At the subsequent meeting, President Lee highlighted the cyclical nature of the shipbuilding industry, noting that “sharp fluctuations between boom and downturn have consistently made employment a key issue.” He emphasized the importance of government intervention, suggesting measures such as allocating more public vessel orders during downturns to stabilize demand.

He also called for exploring ways for the government to share the risk burden of refund guarantees (RGs) with financial institutions and stressed the need to ensure that the benefits of industry growth are distributed more equitably among workers and subcontractors.

Under the newly announced “K-Shipbuilding Future Vision,” the government plans to prioritize domestic orders in the public sector for energy-related vessels, including LNG carriers and offshore wind support ships.

The plan also includes investments to secure core technologies for key vessel types. Over the next five years, the government will invest up to KRW 525 billion to develop cargo containment technologies for LNG carriers, ammonia carriers, hydrogen carriers, and liquefied carbon dioxide carriers.

In addition, the government has agreed with the country’s three major shipbuilders to increase direct employment by 20%, with hiring expected to rise from 2,494 workers this year to 3,254 next year.

A policy to provide performance-based bonuses at the same rate to both primary contractors and subcontractors will also be maintained, ensuring that employees at partner companies receive equal bonus ratios.

Meanwhile, a financial agreement to support the shipbuilding supply chain was signed in Ulsan on the same day. To bolster exports, the government will provide a total of KRW 16 trillion in “win-win trade finance,” including KRW 1 trillion in supply chain guarantees.

Commercial banks and shipbuilders have agreed to establish a KRW 1 trillion supply chain guarantee system. Earlier this year, Hana Bank and HD Hyundai Heavy Industries contributed KRW 23 billion and KRW 5 billion, respectively, to the trade insurance fund. On May 13, Shinhan Bank and Samsung Heavy Industries, as well as Woori Bank and Hanwha Ocean, announced additional contributions of KRW 21.3 billion each.

Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)