President Lee Jae-myung met with Korea's shipbuilding industry on Wednesday and stressed the importance of building a self-sustaining ecosystem. As global demand for cooperation with Korean shipbuilders grows, he highlighted that a solid industrial foundation encompassing not only technology but also supply chains, workforce, and resources will be key to competitiveness. In connection with this, the government is also reviewing an expansion of refund guarantees (RG) to support small and mid-sized shipbuilders, as well as the introduction of a "direct pay" (DP) system that would extend benefits to loss-making firms when the Inflation Reduction Act-style domestic production incentive (IRA) is implemented.
At the "K-Shipbuilding Future Vision Roundtable" held in Ulsan that day, President Lee said, "Shipbuilding is a major industry representing the Republic of Korea." He stressed, "As I have recently met with administrative heads and leaders of other countries, almost all nations bordering the sea are expecting cooperation from Korea in shipbuilding." He added, "When HD Hyundai Heavy Industries' shipyard was built in Ulsan in 1972, this area was truly barren land, but now it has become a global hub of the shipbuilding industry."
A representative example is "MASGA" (Make American Shipbuilding Great Again), which has become the centerpiece of investment cooperation with the United States. Of the $350 billion in total investment Korea pledged to the U.S. last year, $150 billion is slated to be concentrated in the shipbuilding sector. President Lee also reiterated its importance that day, saying, "Shipbuilding has been selected as a core item in the large-scale U.S. investment industry."
The factor President Lee cited as most important in fostering the shipbuilding industry was "building a self-sustaining ecosystem." He said, "These days, international competition is not a single product competition but ultimately an ecosystem competition," adding, "What matters is how robust an internal ecosystem one has." He continued, "If that ecosystem is well established, you have national competitiveness, but if you focus on specific products without that ecosystem, it is not easy to withstand difficult situations."
This is interpreted to mean that beyond the technological capabilities of the shipbuilding industry, the overall foundation composing the industry — including resources, supply chains, and workforce — must also be in place. In particular, given that shipbuilding is more affected by business cycles than other industries, he highlighted the need for all-encompassing efforts to fundamentally strengthen competitiveness. He also expressed that the government must play a central role in such efforts. President Lee pointed out, "Because shipbuilding swings back and forth like a large graph between boom and bust, employment has always been a pending issue," adding, "Subcontractors, partner companies, and equipment suppliers are also exposed to major business cycle fluctuations, making things difficult for them."
In particular, considering that small and mid-sized shipbuilders are facing difficulties in securing orders due to a lack of RG, he also mentioned measures for the government to share the risk burden through fiscal means. RG is a guarantee under which a financial institution refunds advance payments to the shipowner (orderer) on behalf of the shipbuilder if it fails to deliver the vessel on time or goes bankrupt.
President Lee said, "Financial institutions would likely be reluctant to issue RGs because they have to pay out in case of an accident," adding, "The government taking on the risk burden would be much cheaper than spending budgets on job creation, regional development, or fiscal support."
Also mentioned was a system (direct pay) in which, when the government introduces an IRA-style scheme, subsidies would be provided instead of tax reductions so that loss-making companies can also benefit. Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, said, "For items that must be produced domestically, if they are in the early stage and not yet profitable, tax reductions have no effect," adding, "We are consulting on a plan to provide subsidies in the early stage." President Lee lent his support, saying, "There are cases where, after (other countries) destroy the foundation through dumping, you get hit without countermeasures, so we need to create long-term alternatives."
In the subsequent presentation by Minister of Trade, Industry and Energy Kim Jung-kwan, specific strategies for the growth and development of the shipbuilding industry were also presented. These include ▲ building a domestic shipbuilding core with world-class production capabilities and infrastructure ▲ strengthening the global shipbuilding alliance ▲ expanding new hiring centered on the top three major shipbuilders.
