South Korea plans to launch a fund to buy vessels from cash-strapped shipping companies at market prices, and will loosen rules over ship purchases and investment in shippers, a financial watchdog said on Thursday.
The public sector will ante up about 1 trillion won (US$742 million) for the upcoming fund, to which private investors and creditor banks will also contribute, the Financial Services Commission said in a joint statement released with the finance ministry and transportation ministry.
It did not give the expected size of the new fund, which is designed to help shipping firms reduce debt. The industry, led by Hyundai Merchant Marine and Hanjin Shipping in the country, has been struggling with rapid drops in shipment volume and freight rates due to the global economic downturn.
The government is also trying to loosen regulations over investment in shipping companies temporarily until the end of 2015.
Creditor banks will complete their assessment of credit risks at 38 top shipping companies in South Korea by the end of this month, and draw up restructuring and aid plans for some of them.