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  Korea Report - March 2006
  Author : Hwang & Co     Date : 06-04-11 11:16     Hit : 35176    
Topics.

-President Roh request Japan to turn its apology on the past into practice.
-PM Lee resigned after a round of golf.
-Seoul mayor involved in controversy for free tennis.
-NK vowed not to return 6 way nuclear talks amid the controversy of currency counterfeiting.
-Korean division in Iraq well accepted by local society.
-SKorean reporters withdrew from family reunion site in NK for NK¡¯s limit on freedom of presss.
-BOK posted record loss because of KWon stabilizing bond.
-Kookmin Bank chosen for acqusition of KEB at about KW7 tril, while prosecutors investigate Lone Star¡®s misconduct on KEB.
-Carl Ichan plant a director in KT&G through fierce struggle to take over.
-Hynix paid heavy fines in USA over antitrust charge, following Samsung.
-Prosecution raided HMC for its secret slush funds.
-QP-ConocoPhillips awarded 3 major Korean yard for 7 Qflex and 3 Qmax LNG carrier for their QG-III project.
-Korean yards topped sales in 1Q for owner¡¯s rush before CSR.
-HMM aims to be top 5 owner by 2010.

GOVERNMENT AND POLICY

President Roh Moo-hyun issued a strong warning to Japan, in a speech marking the 87th anniversary of the March 1 Independence Movement Day, requesting Japan to turn its apology into practice. He pointed out that Japan has made little effort to change its attitudes over controversial disputes such as Japanese Prime Minister's visits to the Yasukuni Shrine, and approval of history textbooks that glorify its past invasions of Asian countries. He also criticized Japan of designating Feb 22 as "Takeshima Day," reinforcing their claim on the Korea-controlled Dokdo islands, saying it is natural for the Korean people to be concerned that Japan is still trying to repeat its historical aggression on a path to hegemonism again.
Foreign Minister Ban called in Japanese Ambassador in Seoul and lodged a strong protest against Japan's challenge against Korea's sovereignty of Islands Dokdo, stating that along with PM¡¯s continued visits to Yasukuni Shrine, this is a clear example of how the Japanese government is trying to conceal, distort and whitewash the history.
2 district courts in Seoul and Suwon ruled that descendants of people, who collaborated with Japan¡¯s colonial rule, cannot make financial transactions with their land, restricting descendants of collaborators from selling, leasing, or mortgaging land they inherited.

President Roh made a state visit to Egypt, Nigeria and Algeria, seeking a wider source of energy and better economic exchanges with the relatively undeveloped markets.
The presidents of Korea and Egypt agreed to work closely together, particularly in the area of information-technology infrastructure on the basis that Egypt is aiming to become an IT hub of the Mid East and Africa, and also agreed to promote the increased involvement of Korean companies in Egyptian energy development projects, the construction and plant industries.
Korea and Nigeria closed a massive oil field development deal, which will secure Korea at least 12 bil barrels of oil when the exploration into the deep waters of Equatorial Guinea is completed. State run KNOC and Nigerian National Petroleum Corp signed production sharing contracts for blocks 323 and 321, giving KNOC 60%, in return for huge investment promises of up to $6 bil on building 2 power plants with 1,200 km gas pipeline.
Korea and Algeria signed a MOU on widening cooperation in gas and oil development, expanding cooperation within the UN and promoting close cooperation in the development of bilateral and multilateral economic projects among others.

Prime Minister Lee Hae-chan has stirred political circle, by playing a round of golf on the first day of a nationwide railway workers¡¯ strike. He has caused a noise several times in the past by choosing the freedom of the fairways at the times of national emergencies such as a record flood, a devastating wild fire and a transport strike. A daily news paper reported the round of golf was a lobbying attempt by a flour mill owner who hoped to buy PM¡¯s influence to whittle down a fine he was expected to pay for manipulating share prices. PM Lee has been handling regular state affairs, as Roh reiterated that he would focus on 2 key objectives during the next 2 years - easing socioeconomic polarization between the rich and the poor and pushing for a FTA with USA, leaving regular state affairs to PM.
President Roh finally accepted the resignation of his trusted premier Lee, in consideration of the crucial May 31 vote, which elect hundreds of heads of local government and thousands of local council members. The ruling Uri Party, struggling to turn around its dwindling popularity, has favored the premier's departure from the Cabinet, fearing the matter would affect the party's performance in the polls. President Roh selected Han Myeong-sook, 62 years old two-term feminist legislator in the ruling Uri Party, as the next prime minister. She will become the first woman in the history of the male-dominated country to hold the top Cabinet post. Han has been fighting for women's rights, the environment and democracy for the past 30 years, and has previously served as minister of Gender Equality in 2001 and minister of the environment between 2003 and 2004.

Seoul Mayor Lee Myung-bak, a potential presidential candidate, is involved controversy for playing tennis free of charge at a public court for the past 3 years. For the unpaid fees totaled KW28 mil, Lee paid KW6 mil last year and then the members of the Seoul Tennis Council paid the remainder at a discounted price. Lee said he was only informed about the unpaid bill late last year and immediately paid KW6 mil for the amount of time he had played, as he was invited by the then president of the court in 2003, saying "I took the offer in good faith. I thought I was just joining them. But I was shocked by reports saying that the court was reserved just for the mayor," The allegation followed a golf scandal which led the PM Lee to resign a previous week.

Lawmaker, Choi Yeon-hee, 62 years age, accused of sexually assaulting a female journalist, made a public apology for fondling the breasts of a reporter from Dong-a Ilbo, when he was under the influence of alcohol, but rejected calls for his resignation from parliament. The reporter, together with some 120 colleagues at the Dong-a newspaper filed a complaint against Choi with public prosecutors. The main opposition Grand National Party tried hard to detach itself from the embattled politician who was its No 3 man before the scandal. He quit the party shortly after the incident was reported.
The Justice Ministry recently established strict practices to keep sex offenders under surveillance, preventing them from leaving their homes between 10 pm and 6 am for 3-6 months, to prevent sex offenders from repeating their crimes.

A Korean state panel stripped cloning scientist Hwang Woo-suk of the ¡°top scientist¡± title that had entitled Hwang to receive KW3 bil in research funding for the next 5 years. Seoul National University dismissed Hwang from its professorate, and disciplined the remaining 6 professors. Ardent supporters of Hwang have attacked those connected with revealing the scientist's fraudulent research. A woman had been arrested with 30 other demonstrators for an alleged violent protest at SNU, on charges for pounding SNU president Chung Un-chan's car and beating 2 cameramen and leader of the school's investigation into Hwang's papers.

The first shipment of US rice for direct sale to SKorean consumers was being unloaded in Korea, as police held off about 100 farm activists seeking to block the imports. Korea¡¯s parliament approved a deal to allow for the first direct sales to consumers.
The third case of mad cow disease in USA may delay the resumption of US beef imports to Korea. Seoul had agreed in Jan to lift its 3 year ban on US beef by the end of March to facilitate negotiations for a FTA with Washington. The government has delayed its on site inspection of the US exporting system originally set.

A female Navy cadet, who entered the naval academy as the top student, graduated also at the top of her year. In the 60th graduation ceremony of the Naval Academy, Lt Kang Kyeoung, 23, was commissioned as a first class navy officer, beating 163 colleagues and receiving a presidential award. She is the first woman in the history of the naval school to have entered and graduated at the top. Female cadets have ranked top at the Naval Academy for 3 consecutive years since 2004.
The smoking rate of Korean male adults has fallen below the 50% mark for the first time following an increase in cigarette prices in 2004, to 49.2%, down from 52.3% in Dec 2005.
"King and the Clown", a low-budget period drama featuring homo sexuality, emerged as the country's biggest-grossing film ever, breaking the previous ticket sales record of 11.74 mil by Korean War epic "Taegukgi" (2004) in 67 days. The film also overtook the Hollywood blockbuster "King Kong" and other Korean big-budget films at the box office.

The government decided to allow 11 national team baseball players participated in the World Baseball Classic to be exempt from military service as the team advanced to the semifinals of the championship, beating the world baseball giants Japan, Mexico and USA.
Korean female figure skater Kim Yu-na, 16 years age, won the free-skating title at the World Junior Championship in Ljubljana, Slovenia, raising the hope for her country¡¯s first gold medal in future Winter Olympics. She also won her first world title in Junior Grand Prix Final in Ostrava, Czech Republic, in Nov last year.

NORTH KOREA AND NATIONAL DEFENSE

US Treasury Secretary briefed for NK¡¯s official, to explain punitive financial actions USA had taken against Macau-based Banco Delta Asia, who is suspected of serving as a front for NK's counterfeiting and money laundering. NK has denied its involvement in currency counterfeiting or money laundering, and vows to boycott six-nation talks on its nuclear weapons program in response.
A NKorean cargo ship seized in 2003 after being used to smuggle heroin into Australia was sunk when Australian air force used the vessel for target practice.

NK has unilaterally postponed the high-level inter-Korean talks scheduled for March 28-31 in Pyongyang, citing the annual joint military exercise by Seoul and Washington during March 25-31. They warned inter-Korean relations will worsen, or even come to a complete stop, unless SKorean government immediately stops its joint military exercises with US forces stationed in the country. They are defensive drills aimed at intercepting or preventing possible aggressions from the North.

The 3,200-strong Korean contingents have been stationed in the Kurdish city since August 2004 as part of US led coalition forces and succeeded to get the heart of the residents. They paved roads, constructed schools and health centers and repaired water supply facilities, treating up to 29,000 residents in its hospital, and offered industrial training. President of the Kurdistan Regional Government said ¡°there is a saying that the Kurdish has no friends except for mountains, now, we have another friend, Korean troops. They are part of our society. Their presence not only contributed to the security but also gave new hope for the rehabilitation of the region.¡± When Korean troops were passing through the town of Irbil, a crowd of pedestrians gathered to wave their hands and children gave their thumbs up and shouted "Kuri, Kuri" meaning "Korea" in their language.

China's top envoy to Korea warned the strategic flexibility of US troops in Korea should remain a bilateral arrangement without affecting other countries, saying if the strategic flexibility is exercised on a third country, China cannot help but pay special attention to it. The remarks were in response to a question on whether US strategic flexibility may lead to the involvement of US forces stationed here in military conflict between China and Taiwan. Korea and USA agreed in Jan to acknowledge the strategic flexibility of US troops in Korea that would allow the deployment of US troops stationed in Korea to other countries if a conflict broke out.

NKorea insisted that South takes responsibility for withdrawing its press corps from covering inter-Korean family reunions at Mt Geumgang. 21 reporters of SKorea's press corps left the reunion site, following a clash over a politically-sensitive TV report by SBS about a SKorean fisherman who was reunited with his wife after being abducted by the North in the 1960s. NK objected to the term "abduction" being used in the broadcast and put a ban on reporters covering reunion events. North said it would continue the ongoing reunions, as the head of SKorean delegation has expressed regret about its happening. But in a sharp rebuttal, SKorea's Unification Ministry said it never apologized to the North over the incident and that Pyongyang should be held responsible, as the freedom of press was limited by North.
Hundreds of tons of fertilizer are to be delivered to NK as the first shipment of nongovernmental aid NK this year. The shipment is the first fertilizer aid from a civic organization this year, but follows 150,000 tons of it provided by the government.

ECONOMY AND POLICY

Finance Minister predicted Korean economy will easily achieve 5% growth this year, despite unstable exchange rate and consistent high oil prices. JP Morgan raised its forecast on the Korean GDP growth this year from 4.7% to 5.3%.
 
Korea¡¯s exports achieved double digit growth in March for the second straight month, climbing 12.9% on year to $27.04 bil, driven by overseas demand for automobiles, auto parts, semiconductors and LNG initiated shipbuilding orders, compared to the growth of 16.8% in Feb and 3.6% in Jan. KOTRA predicted Korea¡¯s export will be consistently growing to become China¡¯s biggest importing nation in 3 years, while major exporters to China, like Japan and Taiwan, are losing share in the market.
The current account balance is likely to near an equilibrium in the first half, but is expected to move into the black in the second half, making the annual surplus reach $10 bil, compared to the surplus of $8.5 bil in the first half and $8 bil in the second half of last year. The current account deficit reached $760.7 mil in Feb, compared with $91.2 mil surplus in Jan.
Korea¡¯s service sector deficit increased sharply to $1.64 bil in Jan, almost two fold up on year, due to greater overseas travel and educational expenses. Korea¡¯s exports in the service sector grew 3.5% in Jan on year to $3.86 bil, while imports surged 19.9% to $5.50 bil.

Bank of Korea posted record net loss of KW1.87 tril last year, as it had to bear snowballing interest payments on bonds issued to stabilize the foreign currency market, to keep KWon from rising against the greenback. The bank massively issued monetary stabilization bonds to absorb the increase in money supplies stemming from its purchase of USDollars in the currency market. The outstanding MSBs totaled KW155.2 tril at the end of last year, up KW12.4 tril a year earlier, paying interest of KW6.14 tril.
Kookmin Bank, Korea¡¯s largest lender, hired 8 banks, namely Barclays PLC, Calyon, DBS Group Holdings, Dresdner Bank, HSBC Holdings, ING Group, Mizuho Corporate Bank and Wachovia Corp, to arrange a $250 mil loan to refinance debt at lower cost.

Main creditors of LG Card posted a formal sale notice March 27, and the bidders will have to submit formal proposals by April 7. Korean Development Bank, the largest shareholder with a 22.9% stake in the nation's second largest card issuer, leads other creditors with a combined 82.63% stake. The lenders are trying to recoup about KW5 tril spent in bailing out the firm in 2004. Woori Financial Group, Shinhan Financial Group, and Citi Group are seen as the strongest candidates to acquire a 51% stake in LG Card.

Ending a two-year lock-up period this year, Lone Star Fund aims to sell its 51% controlling stake in Korea Exchange Bank by June. After some competition among Singapore-based DBS and Korean lenders Hana Bank and Kookmin Bank, Kookmin Bank was selected as the preferred bidder for the sale. DBS could not meet the qualifications, as Temasek Holdings, DBS's largest shareholder, is a state-owned fund, not a bank. Kookmin Bank agreed to pay around KW7 tril in cash for a combined stake of 64.62% in KEB held by Lone Star and 2 other shareholders. The planned acquisition will be Korea's biggest takeover, following Standard Chartered Plc's acquisition last year of Korea First Bank for $3.3 bil and Citigroup's takeover of KorAm Bank for $3 bil. Adding $280 bil assets, Kookmin Bank will become a significant player in the region, above Standard Chartered Plc.
As the sale of KEB gathers pace, local prosecutors started the separate investigations on Lone Star for its various cases of misconduct including tax evasion, illegal overseas transfer of funds and acquiring KEB at a unjustifiably discounted price. Lone Star apologized for its Seoul office's tax delinquency for which authorities imposed a KW140 bil fine, but refused to pay the fines. It is to reap more than KW5 tril of tax-free profit, as it acquired the shares in Oct 2003 for KW1.38 tril. Prosecutors raided the Seoul office of Lone Star, obtained an arrest warrant for Steven Lee, the former head of the Korean unit of the fund, searched the houses of 5 senior officials of Lone Star and banned 10 officials from leaving the country.

Korea¡¯s oil consumption by private and small businesses fell for the second straight month by 16.5% on year in Feb due to high oil prices and warmer temperatures. The oil consumption for power generation off 34.6% on an annual basis. KNOC signed with Uzbekneftegaz to have the right for exclusive negotiation for the joint evaluation and exploration of Namangan and Chust Field, which is estimated to reserve 435 and 380 mil barrel.

CHAEBOL

The performances of Korea¡¯s top 10 listed conglomerates were on the roller-coaster in 2005. Samsung, LG, Hanjin and Hanwha groups saw their profits shrink, while Hyundai Motor, SK, GS and HHI groups enjoyed an upswing. The Samsung Group saw sales drop 0.15% on year to KW89.6 tril, while net profit fell 29.89% to KW8.46 tril, attributed to a sharp drop in profit at its two key IT affiliates. Third ranked LG Group also suffered with profits falling by nearly half as sales generally declined at its major affiliates involved in electronics, chemicals and liquid crystal displays. HMC Group jumped to second place in business performance, powered by a revival in sales of cars. GS Group, which spun off from LG Group, saw profits soar by 66.6% on year to KW795 bil, thanks to the successful ad campaigns of its construction unit and home shopping network. HHI enjoyed the biggest sales improvement, as it rode on the wave of the booming shipbuilding sector, with the sales up 16.8% to KW12.8 tril and profits soared by 117.89% to KW312 bil. The earnings of top 63 affiliates show that sales amount to KW313.7 tril and net profit KW23.37 tril, compared to sales up 4.9% with net profit down 16.98% in 2004.

6-7 business groups, including CJ, LS and Daelim, are expected to go under the shareholding cap this year, as they saw their total assets surpass KW6 tril. The four-year-old shareholding ceiling prohibits affiliates of business groups with over KW6 tril in total assets from investing more than a quarter of their equities in other companies, aiming to prevent abuse of circulatory stockholding among conglomerates' affiliates and improve improper distributed corporate ownership and unfair governance. The Fair Trade Commission is also set to bring Samsung and Lotte groups under its shareholding monitoring system this year, as the government removed some escape clauses that the group with less debt than equities on their balance sheets is exempted from the restriction.
Governor of BOK criticized the regulation to limit the commercial industries' investment in the financial sector, insisting that when conglomerates were expanding their business on debt financings in the past, the shareholding cap and separation measure were necessary, but as all desperately need their investment, such measures should be reviewed, warning the restraints could discriminate against local capital versus foreign rivals. He also criticized a regulation that currently prevents local nonfinancial companies from holding more than a 4% stake in any financial service firm.

Following an open bid for a hostile takeover of the tobacco and ginseng manufacturer KT&G Corp, Carl Icahn and his partners, whose funds own 6.2% of KT&G, have threatened to attempt Korea¡¯s biggest hostile takeover after KT&G¡¯s management rejected demands for the company to spin off its ginseng unit, sell assets and raise dividends. The tobacco said "We stay firm with our belief that spin offs of our ginseng unit and real estate properties are untimely; in view of steady and long term growth,¡± With Franklin Mutual Advisers¡¯ 8.29% stake in KT&G, 35% of the shareholders may back Icahn, while 40% including the foreign-based 15% seen to be "KT&G-friendly." Foreign investors control nearly 60% of the shares.
Last month, Icahn and his partners requested KT&G's for the cooperation in its bid to purchase the company at KW60,000 per share for the current price of KW51,200, valuing the company at KW9.6 tril. When KT&G refused, they again raised the bidding price to KW70,000. US investors filed a formal complaint with Daejeon District Court demanding to stop the board election, as the company purposely limited the number of seats, its nominees can win, to 2 instead of 6, asking a cumulative voting for all 9 nominees. But KT&G was backed by Daejeon District Court, who endorsed its claim that its board nomination procedure is in line with the nation's codes that leave up to the company's board to decide how to carry out the board election.
In the share holders¡¯ meeting, Warren Lichtenstein, Icahn¡¯s partner, was elected as an outside director to serve on the 12-member board, putting US investors in a better position to realize their demands for its management shakeup, as Lichtenstein provides Icahn and other allies with ample financial and management information, like installing the wooden horse of Troy. . While Financial Supervisory Commission had called for stepped up measures to protect local firms, the Finance Ministry declined to intervene in the battle for control over KT&G, even after conceding that corporate Korea lacks sufficient tools for defending its management.

Yoon Jong-yong, vice chairman of Samsung Electronics (SEC), was selected as one of 30 World's Most Respected CEOs, by Barron¡¯s, for his role to lead SEC¡¯s growth in technologies and make SEC No 1 in world market share
SEC has launched mass production of memory chips using its own 80-nanometer manufacturing technology, which first developed by SEC in Sept 2003, boosting productivity about 50% compared to the 90-nano technology. SEC marks the first time that NAND flash has moved into mobile computing applications to replace hard disk drives.
SEC introduced the 32-gigabyte flash SSD, functioning the same as a hard disk drive, as a data storage medium for notebooks and other mobile computers. Users can upload and download data quickly and quietly with minimal power consumption. The flash SSD, weighing only half as much as a hard drive, reads data 3 times faster and writes data 1.5 times faster. SEC projected the SSD market will surge from $540 mil in 2006 to $4.5 bil by 2010.

4 executives of Hynix Semiconductor, the world's second largest computer chipmaker, agreed to plead guilty and will serve jail time ranging 5-8 months and pay fines of $250,000 each over a conspiracy to set prices in the $25.3 bil a year DRAM market. Hynix has already paid a $185 mil penalty last year to settle the case. 4 companies have been charged in the same cases, including SEC, which last year agreed to pay a $300 mil fine, the second biggest antitrust fine levied in US history. 3 executives of SEC agreed to serve prison time of 7-8 months and pay a $250,000 fine each. Infineon Technologies has also paid $160 mil in fines while Elpida Memory of Japan agreed to pay a fine of $84 mil in Jan. 4 Infineon employees have served prison terms 4-6 months.

LGE set up 3 more subsidiaries in Europe to increase its share of European market before the World Cup finals. LGE now has 24 subsidiaries in Europe, handling manufacturing, sales, services and logistics, maintaining high growth at an annual average of 47% in Europe since 2004. LG Corp, the holding company of LG Group, Korea¡¯s No3 chaebol, is to invest KW7.3 tril for research and development until 2007, KW3.2 tril of which will be used this year.

S-Oil Corp, 35% owned by Saudi Aramco, is to invest total KW3 tril to build a 440,000 bpd refinery in western Korea by 2010, raising its total capacity by almost 70% and making it the country¡¯s No 2 refiner. Doosan Heavy Ind has reached a preliminary agreement with 2 Chinese companies, namely Power Investment Corp and Harbin Power Equipment Co to cooperate in nuclear electricity generation projects. Schindler Holdings, world No 2 Elevator maker, acquired 25.54% stake in Hyundai Elevator from KCC, paying KW125.5 bil.

Kia Motors is to build a $1.2 bil plant in state of Georgia in USA, close to affiliate HMC's production unit in Alabama, aiming to produce 300,000 vehicles annually from 2009. The new plant will allow Kia to produce 1.03 mil vehicles overseas, including 300,000 units in Slovakia and 430,000 units in China. HMC is also building more factories in China, India and may set up one in the Czech Republic. Hyundai-Kia's combined overseas production is expected to hit 3 mil units in 2009, nearly half of its total production.
INI Steel changed its name to Hyundai Steel Mill.

Prosecution investigators raided the main offices of HMC, Kia Motors, Globis, Autonet and HMC Group¡¯s other subsidiaries, as part of its probe into a lobbying scandal involving an arrested high-profile financier. Prosecution has secured circumstantial evidence that HMC Group has provided billions of KWon to Kim Jae-rok, who was arrested on charges of arranging illegal bank loans and bribing politicians and government officials in the late 1990s and early 2000s. The prosecution arrested CEO of Glovis, HMC¡¯s logistics unit, over allegations on creating a KW10 bil slush fund to lobby government officials and politicians and dodge inheritage tax. Glovis¡¯ majority shareholder is Chung Eui-sun, the only son of HMC Chairman Chung Mong-koo.

POSCO Chairman Lee Ku-taek was named the Honorary Companion of the Order of Australia, Australia¡¯s highest award, for his service to Australia-Korea relations through trade and investment. POSCO is Australia's single biggest corporate customer and Lee is the chairman of the Korea Australia Business Council.
 
MONETARY AND ECONOMIC INDICES

Korea¡¯s Stock Price Index has been slow through the month, starting at 1367, plummeted to 1309 and recovered to 1338 at the end of the month.
KWon has been stable, in the box of 969-983-976 against USDollar. The exchange rate once dropped to 950 about 50 days ago, but once recovered 980 level, reflecting FOMC¡¯s decision to raise bench mark interest rate. Kwon has gained 3.1% against USD this year, while the JYen has dropped 0.3%. US Federal Reserve raised the federal interest rate by 0.25% to 4.75%, lifting the borrowing costs for the 15th consecutive time since June 2004. The yield on 3 years corporate bond kept in the range of 5.21-5.46%. Korea¡¯s foreign exchange reserves rose to $217.34 bil at the end of March, up $13.9 bil from the Feb.
Each Korean paid KW3.37 mil in taxes last year, up 6.6% from 2004. In 2005, the government collected KW162.9 tril of general taxes, out of which internal taxes accounted for KW127.4 tril, and the remaining KW35.5 tril were local taxes.

SHIPBUILDING AND SHIPPING

Qatar Petroleum and ConocoPhillips' Qatargas-3 project awarded 7 x Q-flex LNG of 210K – 215K cbm and 3 x Q-max of 267K cbm, for the total value of about $2.65 bil. SHI took the lion's share with 3 x Q-maxes + 1 x Q-flex, while HHI and DSME share 3 x Q-flexes each. But the yards will have to wait until May, when QSAT is due to select the ship owners who will make partnership with Qatar Gas Transport Co (QGTC) for the vessels.
Korean shipbuilders dominated the global market for LNG carriers last year amid surging demand for natural gas, winning the orders for 33 LNG carriers out of a total of 42 carriers.. It is the third consecutive year for Korean yards to sweep the global LNG market, with a 73% market share in 2004 and an 80% in 2003. Korean shipbuilders also led the global market for offshore oil facilities last year, for the sixth consecutive year since 2000, amid rising demand, winning 5 out of 7 FPSO orders last year.
Domestic shipbuilders have swept global orders in the first quarter this year, as Owners are rushing to secure the slots for the huge pile of tanker orders, before the new common structural rules comes into force on April 1. HHI Group, which consists of HHI, HMD, received orders worth more than $5 bil in first quarter of this year. DSME, which is aiming for new orders worth $10 bil this year, has already achieved 45% of its target in the first quarter. SHI achieved 44% of an annually anticipated $7.7 bil in new orders, and STX got $1.2 bil, about 46% of annual target.

HHI secured the contract from Neu Seeschiffahrt for 1+1 x 75K cbm VLGC, Solvang 1+1 x 75K VLGC, TransPetrol 2 x 82K VLGC, AMPTC 2 x 82K VLGCs and 2 x 112K pc, Hapag Lloyd 4 x 8800 teu, Euronav 2 x 318K VLCC, Dynacom 4 x 318K VLCC and Chambal Fertilizer 2 x 105.8K tanker. Hyundai Samho got the job from National Shipping Corp of Saudi Arabia for 4+2 x 318K VLCC. HHI signed the contract NACKS to supply 4 units of engine at B&W 12K98MC type with 93,360 BHP. HHI¡¯s share holders¡¯ meeting elected Choi Kil-sun, president, as representing director jointly with Min Kye-sik, V Chairman.
HMD received order from Inter Orient for 4 x 37K pc, Westfal-Larsen 6 x 46K IMO II chemical tanker and Gulf Energy Maritime 4+4 x 75K tanker.
DSME bagged the orders by Transocean for 1 x Drillship, Exmar 2 x 150.9K RGLNG carrier and KRISTEN Navigation 1 x 320K VLCC. DSME has appointed Nam Sang Tae, an expert in finance, as its new CEO, replacing Jung Sung Leep, who stepped down 6 months before the end of his contract. Lee Jae-bong senior executive direct was assigned as chief of Daewoo Mangalia yard, and Lim Noon-kyu returned home after his term.
SHI won the orders from Stena Drilling for 1 x drillship, Danaos 4 x 4,300 teu and Hanjin 4 x 4275 teu container ship. SHI has officially begun work on a second hull-block assembly factory in Weihai City in China, on the plan to start operation by early 2008, investing $100m in the first phase for a block-assembly capacity of 100,000 tons per annum, and invest a total of $350m to increase the eventual capacity to 200,000 tons. SHI built its first block-fabrication factory in China 8 years ago at Ningbo with annual capacity of 120,000 tons.
Hanjin Heavy Ind is to invest KW700 bil in building a shipyard in Subic Bay by 2016, to build LNG carriers and VLCC. It also plans to spend KW200 bil in its Busan shipyard to build more LNG vessels and eyes DSME which is scheduled to go on sale early next year.
STX received orders from Capital Ship Management for 3+2 x 51K ice 1A pc, Cido 6 x 51K pc, Pietro Barbaro 1 x 51K pc, NYK 2 x 2,700 teu, MISC 5 x 38K chemical carrier and Great Eastern 2+2 x 74.5K pc. 
Daesun won its first tanker order from Arne Blystad for 4 x 25K products/chemical. Shin-A signed with Stolt-Nielsen to build 2+2 x 44K IMO II tankers. INP got the order from Primera Maritime for 2+2 x 13K chemical tankers, 

Busan, Korea¡¯s largest port, retained its No5 spot in container handling capacity last year, but seemed to be losing ground to emerging rivals in neighboring countries. Busan handled 11.84 mil TEUs in 2005, up 3.6% from the previous year. Singapore outpaced Hong Kong to become the world¡¯s largest container port, handling 23.19 mil TEUs, up 8.7% on year. Hong Kong slipped to the second spot with 22.48 mil TEUs, followed by  Chinese port, such as Shanghai and Shenzhen.
HMM is aiming to break into the top 5 of worldwide shipowners by 2010, targeting annual sales of $10bn, which is more than double of its sales $4.7bn in 2005, as well as boost operating profit from $450 mil to $1.2 bil and lower the debt ratio to 160%. The number of vessels in its fleet should rise to 235, including a jump in containerships to 80 from 39.