A lot of factors can contribute to the development of shipbuilding industry, but the most important factor is Government support. The industry itself is closely related to the shipping industry, since shipping industry obviously uses ships to operate :D so down turn in shipping industry also leads to the gloom in shipbuilding industry. Others factors such as oil price, war, etc can accelerate the process of down turn or the peak of shipbuilding industry (Zhend Dong Lu, Thesis p. 79)
It is also mentioned in a study that Government support plays biggest role for a nation to be market leader in shipbuilding industry. There are 6 factors that critical to the success of this goal:
- Development Phase from agriculture to industry – increase internal demands
- Involvement of government – financial aids
- Involvement of government – orchestration
- Co-operations among yards
- Competence supply chains – low cost supplies
- Develop specialized technologies and skilled labors
| Country | State Aid |
| South Korea | • Announcement of a 32 trillion Won (approx. 18 billion Euro) support package to shipyards and ship owners as part of an emergency economic policy, comprising 12 billion Euros in loans and guarantees to shipyards and suppliers (supply of working capital) and 6.7 billion Euros in direct loans and debt guarantees to ship-owners (domestic and foreign). |
| • Creation of a fund of some $3 billion (30% funded by government) to buy over 100 ships from Korean shipping firms. | |
| • The Korean Export-Import Bank has put aside 8.5 trillion won for loans to small domestic shipbuilders. The government will encourage state-run banks to provide guarantees for overseas contracts of troubled companies. | |
| • Korean Development Bank Program for Shipping Industry: | |
| - Size: Circa US$ 1.6bn | |
| - Investment Period: 2 years (up to 3 years) | |
| - Investors: KDB, Daewoo Shipbuilding and Marine Engineering, STX Panocean, Dongbu Insurance | |
| - Target Vessels: NBs and 2ndhand vessels | |
| - Fund Tenor: 5 to 7 years | |
| - Target IRR: Min 10.5% p.a. for the fund investor | |
| - Asset Management: KDB Asset Management or Korea Infrastructure Investments Asset Management ("KIAMCO") | |
| China | • State owned COSCO, China Shipping Group and Sinotrans are supported to pick up cancelled shipbuilding orders from state owned shipyards (CSSC and CSIC. |
| • State owned shipyards CSSC and CSIC support to carry out mergers and acquisitions through capital injections and the creation of an industrial fund | |
| • Continuation of the stimulus package to expand annual shipbuilding capacity to 50 mln DWT annually. | |
| • Specific measures, including competitive loans to ship owners to encourage fleet renewal; increased and preferential credit facilities for foreign ship buyers; (17%) subsidy on ship prices for domestic ocean going ships till 2012; access to working capital for shipbuilders at preferential interest rates + mortgage financing for ships under construction. | |
| India | • Build in India policy – proposal for a $2 billion loan packages to the shipping, The fund is to provide shipowners loans at competitive rates and encourage them to acquire vessels from domestic shipyards industry connected to the idea of buying at domestic yards |
| • Several shipyards in India will receive subsidies of up to Rs 60 billion (USD 1.25 billion) over the next few years | |
| • 2007 subsidy scheme (30% subsidy) for orders secured till August 2007, Newly proposed 20% subsidy from 2007 onwards. The Government provided a ship building subsidy benefit of 30% to shipbuilding companies for exported NBs, subject to fulfilment of certain conditions | |
| Brazil | • 2003 Build in Brazil directive; |
| • Subsidized loans for costs of domestically built ships by BNDES (state development bank) | |
| USA | • The USA economic stimulus package also contains a budget for the acquisition of public support vessels such as ferries. |
| Turkey | Stimulus plan including: |
| • Commercial loans and credit facilities to build ships contracted before downturn; | |
| • Extended loan facilities by Eximbanks for exported ships; | |
| • Encouragement of public sector to follow a Build in Turkey policy for their own ships; | |
| • Potential financial guarantees for companies in trouble. | |
| Malaysia | • The Government has allocated an additional RM 2bn (US$ 542m) from its 2009 budget to a RM 1bn shipping fund, managed by Bank Pembangunan and a shipping venture fund Global Maritime Ventures |
| • The development bank plans to disburse RM 800m (US$ 217m) worth of loans this year and the remaining in 2010 | |
| • Ships have to be managed by Malaysian companies and carry national cargo or call at Malaysian ports | |
| • Successful applicants will be able to enjoy lower interest rates –ranging from 4 to 6 % –a further preferential rate will be granted to finance vessels built at the domestic shipyards | |
| Singapore | • Government through the IF Scheme will take 80% share of the default risk for loans up to SGD 50 million (USD 35 million) extended to Singapore based companies used for overseas asset acquisitions and working capital |
| • Some banks are able to take advantage of this IFS scheme and extend loans for the purchase of smaller vessels, such as tugs and barges | |
| • Withholding tax exemption on interest payable on a foreign loan entered into by a shipping enterprise to acquire a Singapore flagged ship under the Block Transfer Plan has been extended by another 5 years |
So how about Indonesia? Too bad I don't know :D
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