South Korea promotes domestic shipping industry’s global expansion

SOUTH Korea supports the overseas expansion of shipping and logistics firms, as well as the adoption of eco-friendly fleets, to boost national logistics competitiveness.

The Korea Ocean Business Corp, a public organisation under the Ministry of Oceans and Fisheries, has officially opened its first overseas office in Singapore to support the global expansion of South Korean shipping and logistics companies.

Established in 2018, the KOBC was set up to support the domestic shipping industry, which had stagnated around the time of Hanjin Shipping’s bankruptcy.

“The establishment of our Singapore office is a strategic decision, reflecting both the nature of our business and the global market environment,” the KOBC said. “We have set up a stable foreign currency funding system with a focus on Asian financial markets. Singapore has already become a key funding hub for us.”

The Singapore branch intends to provide on-site support for the overseas business activities of South Korean shipping and logistics companies, strengthen the discovery and management of investment projects in Southeast Asia, and expand its network of co-operating financial institutions and investors.

In line with the opening ceremony, a MOU was signed with DBS Bank, which is headquartered in Singapore, with the aim of strengthening financial co-operation and supporting financial activities for Korean shipping and logistics firms.

Through the agreement, the KOBC intends to diversify its funding channels, moving away from a reliance on US dollar-based financing and exploring local currency bond issuance and other methods.

“By leveraging DBS’s expertise in environmental, social and governance (ESG) matters, the two organisations also plan to collaborate on the development of sustainable financial products,” the KOBC said.

After opening an office in Singapore, the KOBC plans to establish an office in New York in 2026. The company also aims to expand its overseas network to other major financial and shipping hubs, such as London, in the future.

In addition, the organisation is pushing for the introduction of special taxation for ships, which would provide tax benefits to encourage domestic shipping companies to adopt eco-friendly vessels.

The move comes as the pace of transitioning to eco-friendly vessels in the domestic shipping industry remains slow.

“By the end of 2024, the global transition rate to eco-friendly vessels was around 19.5%, whereas South Korea’s rate was only 7.1%.”

The special taxation aims to reduce the initial investment burden of constructing eco-friendly vessels by utilising tax credits and accelerated depreciation, thereby encouraging shipping companies to invest in such vessels more quickly.

A request for a preliminary feasibility assessment of the special taxation was submitted to the Ministry of Economy and Finance.

The KOBC said: “South Korea’s new ship tax measures also aim to benefit the shipbuilding and green fuel infrastructure sectors, while encouraging private financial participation in the domestic ship finance market, which is currently dominated by foreign and policy banks.”