Emergency Management Fund of 60 Billion KRW Provided to Korea-China Shipping Companies Affected by COVID-19

Government Announces 'Emergency Support Measures for Aviation and Shipping in Response to COVID-19'

On the 16th, after closing the emergency room of Korea University Hospital in Seongbuk-gu, Seoul, where the 29th COVID-19 patient had visited, disinfection measures were initiated. Photo by Jinhyung Kang aymsdream@

[Sejong=Asia Economy Reporter Joo Sang-don] The government will provide financial and fiscal support, including an emergency management fund of 60 billion KRW, to Korean-Chinese shipping companies on the Korea-China route that are struggling due to the spread of the novel coronavirus infection (COVID-19).

The Ministry of Oceans and Fisheries announced on the morning of the 17th that at the '6th COVID-19 Response Economic Ministers' Meeting and the 5th Economic Vitality Measures Meeting' held jointly with related ministries, it unveiled the 'Emergency Support Measures for Aviation and Shipping in Response to COVID-19.'

Due to the spread of COVID-19, passenger transportation between Korea and China has been completely suspended since the 30th of last month. As a result, the sales of passenger shipping companies on the Korea-China route and businesses operating in international passenger terminals have sharply declined. Additionally, concerns have arisen about disruptions to cargo shipping operations due to a decrease in cargo volume to China caused by the contraction of the Chinese domestic economy and delays in ship repairs due to reduced operations at Chinese shipyards.

In response, the government has prepared measures to minimize the deterioration of business conditions in related industries caused by the suspension of passenger transportation through emergency management fund support and reductions in port facility usage fees and rents, while also maintaining a smooth cargo transportation system by extending the validity period of ship inspections. Furthermore, the government plans to actively strengthen port competitiveness by securing alternative storage yards and supporting the attraction of transshipment cargo in preparation for a temporary increase in cargo volume at domestic ports due to logistics delays in China.

First, a total of 30 billion KRW in emergency management stabilization funds will be provided to passenger shipping companies. This will be done by depositing funds from the Korea Ocean Business Corporation with financial institutions under the condition that these institutions use the funds for loans to the shipping companies' operating capital. The support targets are the 14 passenger shipping companies whose passenger transportation has been suspended and who wish to receive financial support, with a maximum of 2 billion KRW per company.

During the period of complete suspension of passenger transportation, an additional 70% discount on port facility usage fees will be applied. Even after partial resumption of passenger transportation, a phased support plan will continue, including an additional 30% discount until the infection alert is lifted.

Rents for commercial facilities operating in international passenger terminals, which have seen a sharp decline in sales after the suspension of passenger transportation, will also be reduced. During the suspension period, up to 100% rent reduction will be applied, and after partial resumption of passenger transportation, a 50% reduction will continue until the infection alert is lifted.

Emergency management stabilization funds of 30 billion KRW will also be provided to port stevedores who have suffered damage due to decreased cargo volume to China caused by reduced factory operations in China. The maximum support per company is 2 billion KRW, with an interest rate around 2% and a maturity of one year.

In the event of a temporary increase in cargo volume at domestic ports due to logistics delays in China, alternative storage yards such as idle berths and port hinterland complexes will be provided. If the situation prolongs, measures such as reductions in alternative site usage fees and free opening of storage yards will be implemented.

Support to attract transshipment cargo will be strengthened in preparation for a decrease in import and export cargo volume. The Port Authority plans to provide additional incentives within 10% of the total amount per port to shipping companies that generate new cargo volume during the COVID-19 outbreak period. The Ministry of Oceans and Fisheries will also consider measures to minimize transshipment at other terminals while compensating shipping companies for part of the transshipment costs at other terminals.

Additionally, to support employment retention of employees of passenger shipping companies whose passenger transportation has been suspended, the Ministry of Employment and Labor's employment retention subsidy will be utilized to provide partial support for workers' wages (within 180 days per year). For port transportation-related businesses such as ship supplies and bunkering, which are expected to suffer sales declines due to reduced port calls of cargo ships, support will be included under the Small and Medium Venture Business Administration's emergency management stabilization funds to provide urgent liquidity support.

Meanwhile, the Ministry of Oceans and Fisheries will hold the 2nd COVID-19 Countermeasures Meeting for the shipping and stevedoring industries and related associations at 4 p.m. today in the large conference room on the 10th floor of the Shipping Building in Yeouido, chaired by Minister Moon Sung-hyuk, to explain the newly prepared support measures for the shipping and port sectors and listen to suggestions.