South Korean government is launching a corporate restructuring plan targeting its financially-troubled industries, including its shipping and shipbuilding sectors.

The move comes amid the need to push harder the restructuring of vulnerable industries hit by a global slowdown to reduce overcapacity and boost long competitiveness, especially since business conditions have continuously deteriorated.

In a three-track plan revealed by the country's financial regulator, the Financial Services Commission explained the steps to be taken to help the distressed companies.

Under the plan, a consultative body of government officials would set a direction for groups proceeding with restructuring, companies would be sorted out through credit evaluations and industries with overcapacity restructuring and reshuffling would be encouraged to carry out voluntary and preemptive reshuffling.

Specifically, with respect to the country's big 3 shipbuilders, the regulator said that Daewoo Shipbuilding & Marine (DSME) will be required to submit layoffs and cost savings. The shipbuilder's counterparts Hyundai Heavy Industries (HHI) and Samsung Heavy Industries (SHI) would have to pursue self-rescue plans with their creditor banks.

With respect to shipping, Hyundai Merchant Marine (HMM) is to be provided with support for business normalization from creditors, strike a deal with ship owners to lower charter rates and reach an agreement with bondholders to restructure the debt.

On the other hand, Hanjin Shipping applied for a debt restructuring agreement with creditors on April 25. The creditor group will review the proposal and make a decision on whether it will initiate the procedure or not.

As disclosed, the procedure will proceed in accordance with the same principle applied to HMM.