South Korea said on Wednesday it will continue with corporate restructuring efforts in 2017, with plans focusing on shipping and shipbuilding companies struggling with shrinking global demand.
“If last year we put together the rules and framework for corporate restructuring despite hardships, this year we will engage in restructuring in earnest and make sure the efforts are carried out smoothly,” Finance Minister Yoo Il-ho said in opening remarks at a joint meeting with other government ministers.
They ministers were discussing this year’s plans for restructuring industries that also include steel and petrochemicals.
South Korea launched efforts last year to save its shipping and shipbuilding industries, traditional engines of growth, including injecting state-run bank money into a shipbuilder and also planning to establish a state-backed ship financing company.
A joint statement regarding the plans said it was uncertain whether the country’s three biggest shipbuilders, Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering Co Ltd and Samsung Heavy Industries Co Ltd would meet their earnings goals for this year.
The statement said shipbuilders would continue to struggle in 2017 because of their reliance on offshore orders, which have been dwindling due to a broad cooldown in the global economy.
To beat these headwinds, the shipbuilders will continue with plans to sell off non-core assets. For example, Daewoo Shipbuilding will sell all assets not related to ship production to shore up liquidity, as well as scaling back plans for offshore projects.
Hyundai Heavy and Samsung Heavy would do the same with assets that were not key to their shipbuilding business, the statement said.
Regarding the shipping industry, which saw the collapse of Hanjin Shipping Co Ltd last year, South Korea sees market conditions improving after two to three years of corrections, although demand will not be favourable for the time being, the statement said.
Yoo said the government would improve the regulation of relationships between ship and and cargo owners by October and boost incentives to attract more trans-shipment cargoes.
The finance minister added South Korea will also announce more market-friendly plans for corporate restructuring by March.
Source: ReutersPrevious Next