Vice Minister of Oceans and Fisheries Song Myeong-dal announces measures to revitalize the shipping industry at the Government Complex in Sejong, Thursday. Yonhap

The government will inject an additional 3.5 trillion won ($2.5 billion) into the shipping industry by 2030 to revitalize the sector, which is facing a worsening outlook, the Ministry of Oceans and Fisheries said Monday.

The ministry also unveiled the government's plan to extend the tonnage tax system, while making continuous efforts to privatize HMM, Korea's largest container shipping company.

"Amid the growing uncertainties over the global economy, the world's second-largest container shipping company even suffered a loss," Oceans Minister Kang Do-hyung said during an emergency meeting of economic ministers. "The government and the private sector will jointly reform domestic shipping firms, so that the nation's shipping industry can overcome the current crisis and grow further."

The investment plan was announced as sea freight rates have remained low after the end of the COVID-19 pandemic, following the increasing supply of large vessels and the global economic slowdown.

The maritime ministry explained that its proposed 3.5 trillion won investment is separate from its previous plan to invest 3 trillion won to enhance the shipping industry's competitiveness, which was announced in November 2022.

"We will offer an additional 250 billion won in financial support to small- and medium-sized shipping firms, while investing 2.13 trillion won in the construction of eco-friendly vessels and 1.1 trillion won in the establishment of eco-friendly bunkering infrastructure," Vice Oceans Minister Song Myeong-dal told reporters last Thursday.

With the financial support, the government aims to increase Korea's capacity of shipping to 140 million tons by 2030, while raising the capacity of container shipping to 2 million twenty-foot equivalent units (TEUs) by 2030 from the current 1.2 million TEUs.

An HMM container ship is seen docked in this undated file photo. Courtesy of HMM

HMM also said Monday that its container shipping capacity will rise to 1.5 million TEUs by 2030 from 920,000 TEUs in 2024. The company also seeks to raise the size of bulk cargo to 12.28 million dead weight tonnage (DWT) by 2030 from 6.3 million DWT in 2024.

Regarding the shipping firm's privatization, which ended in failure earlier this year, the vice oceans minister said the ministry is in talks with relevant institutions to decide when and how to sell the company.

He added that the Ministry of Economy and Finance is looking favorably on extending the tonnage tax system, after President Yoon Suk Yeol pledged his support of the system during his visit to the seventh container terminal at Busan New Port in Changwon, South Gyeongsang Province, April 5.

The system allows shipping companies to pay taxes based on the net tonnage of their fleet, rather than their profits, making the tax burden lighter than when paying corporate taxes. The oceans ministry has differed with the finance ministry over the system's scheduled expiration at the end of this year.

In response to the tightening of global environmental regulations, the government plans to offer various incentives for investments in eco-friendly vessels.