Notwithstanding uncertainties over the short-term global economy in the wake of the terrorist attack on the U.S.A last year, outlook of the world economy growth during this decade seems bright thanks to well implemented WTO regime, and inauguration of New Round, wide and in-depth application of information technologies, successful introduction of EURO, economic reforms achieved worldwide after the Asian financial crisis in 1997, and steady oil prices, etc. even if oil prices have gone up somewhat now because of growing tension between the U.S.A and lraq.

　

In line with the anticipated expansion of the world economy, KSA expect annual average newbuilding requirement will be around 22 million CGT throughout this decade against around 26.5 million CGT of capacity in 2005 including new drydocks in China. This means world shipbuilders will enjoy rather high capacity utilization rate of 83 percent (In 2000, the rate reached to around 86%, 20.3 million CGT completion against 23.5million CGT of capacity). This does not include such floating structures as Drilling rigs, floating production storage and offloading vessels (FPSO), possible LNG EPSO and super post panamax containerships of 10,000 TEU and over.

　

In the latter half of the decade, a new ship type and FSO for carrying or storing Liquified Carbon Dioxide (LCD) are expected to be required for the prevention of global warming. In the North Sea, Hydrated Liquified Carbon Dioxide has been successfully tested to replace treated seawater for filling up depleted oil/gas wells. Bush administration has launched a similar research program including onshore

oil/gas wells, after rejecting Tokyo Protocol.

　

In the Far East, Ro-Ro passenger ferry market is expected to emerge around the Beijing Olympic Game in 2008, when most of middle class Chinese household will be able to buy their own cars. Given the difference in newbuilding forecast between shipbuilding associations, KSA seems too optimistic but past forecasts since 1993 have seen being very well in line with the newbuilding completions.

　

It took around 30 years for Korean shipbuilders to catch up with Japan. However, in terms of volume, Japan is still the largest shipbuilder in the world in every respects (completion, capacity, and technology, etc.) except new order where Korea sometimes took over Japan. By value, EU shipbuilders top the other countries due to almost complete dominance on Cruise ship and high-tech market segments including Hopper dredgers, etc.

　

　In the late 1990s, Korea shipbuilders have achieved great productivity improvement both in terms of yearly production volume per employee and yearly number of turn over of dry-docks. In addition to management efforts and investment in both hard and software, commitments by employees are thought to have greatly contributed to increasing productivity through taking serious care of accuracy control, coordination, etc. It seems that employees have recognized what job security means to them after the Asian Economic crisis in 1997.

　

Not to mention productivity, low global industrial raw material prices and cheap labor cost by weakened Korean Won against U.S dollars allowed very competitive Korean ship prices, and ensured around ten percent of operating income in recent years. Most KSA member companies are now independent from group operations and reports quarterly business results. This ensures handsome profits in the coming years, and thus investments are expected to increase in productivity improvement and R & D for more efficient and environment-friendly new ship types. Korean share of shipbuilding is expected to be 30 to 35 percent compared to more than 40 percent of Japanese share throughout the 1990s.

　

As one of the OECD CWP6 member countries, who ratified the so-called 1994 OECD shipbuilding agreement, Korea including shipbuilders has made continuously every efforts to establish level playing field in the world shipbuilding.

　

However, some countries are granting more support measures and official subsidies while claiming fair competition. These Government interventions allow inefficient and/or unviable shipyards to continue in business without facing up to economic reality by restructuring, investing in improved productivity or going out of business altogether.

　

As a result the necessary restructuring of the world shipbuilding industry is delayed and over-capacity is continued or even increased. This in turn results in distortion of the world shipbuilding market rather than allowing market forces to correct the situation.

　

As a matter of urgency, it is essential that governments cease intervening in support of their domestic shipbuilders. Only in this way can sound development of the world shipbuilding industry be achieved based on the principles of free market competition. Abolishment of direct and indirect subsidies would be a milestone in establishing normal competitive conditions.

　

Thank you very much.