[ The Domestic Shipping Industry to be Liberalized Earlier… ]

The Domestic Shipping Industry to be Liberalized Earlier Than Origina
lly Planned.
It is expected that a complete opening of our domestic shipping marke
t will be made next year.
According to the report submitted to the National Assembly this Septem
ber by the Korea Maritime and Port Administration(KMPA), new participa
tion in shipping business will be completely allowed by changing the c
urrent licensing system into the reporting one or the registration one
from next year.
This plan was originally to be carried out from 1996 but it will be im
plemented much earlier than scheduled which was considered to be very
essential in order to formulate domestic shipping companies’ free com
petition against the abolishment of the existing zones of deep sea an
d coastal etc., from next year and further to uprade the current vari
ous maritime policies/regulations etc., before joining the OECD in 199
6.
At the same time, whenever the domestic shipowners try to purchase the
ir required tonnage, they do not feel that they can very successfully
achieve the necessary international competitiveness due to the various
restrictions in their utilizing the foreign loans whose interest rate
s etc., have been largely much more competitive ie 4~5 percent lower t
han the domestic financing.
Under the circumstances, they will further proceed with much freer uti
lization of the above foreign loans following the year of 1997 which w
ill be largely in line with the government’s overall opening of the d
omestic finance markets. By the same token, it is expected that the sh
ipowners will be allowed to operate those ships under time charter whi
ch have been acquired through their overseas branch office and at the
same time, the government will very positively proceed with any ways o
f securing shipowners’ required finance through their companies’ sha
res being offered to public sales through the stock market.
Furthermore, there has been a very widespread opinions that the relev
ant various taxation systems have proved to be very unfavourable compa
red with the major competing countries and consequently no import duti
es will be levied to those newbuilding ships that have built in the do
mestic shipyard under the hire purchase BBC contract and likewise any
corporation taxes against the possible proceeds from any differentials
in ship price will be reserved for five years.
Lastly it is further disclosed that the government will try to allow t
he domestic shipowners to fly the convenience flag like Liberian or Pa
namanian one under which they can have much benefit in terms of any ta
xes or charges etc..