The managing director of Thailand's Precious Shipping Public Co has painted a gloomy picture with sharp comments about the South Korean shipbuilding industry. Khalid Hashim told a conference in Singapore that because of Korean shipyard troubles it was questionable how much of current orders would be built, how much would be delayed and for how long. 'We are willing to wager that somewhere upwards of 15, possibly up to 25, per cent of all such orders will never see the light of day,' he said. Between 25 and 50 per cent would be delayed between one and three years and the balance would be delayed by a minimum of six months to a year. Mr Khalid said that some Korean yards, if not all, had applied for court protection from creditors. The difficulties would stem the torrent of supply that had delivered ships to the markets with unnerving speed. Mr Khalid said South Korea accounted for 37 per cent of all ships being built in the world, with the top five to six yards in South Korea accounting for about 95 per cent of this capacity. 'With the financial tensions in South Korea, most of these shipyards are now facing a credit squeeze of unimaginable proportions,' he said. Foreign orders had dried up since mid-December because of South Korea's declining credit rating and fears of labour unrest. Shipbuilding was an industry characterised by a mismatch of cash flows, he said. By the time the vessel under construction was completed, the shipyard would have spent the entire value of the ship, including the shipyard's profit margin, if any, while the buyer had paid at the most only 60 to 65 per cent. This meant the shipyards were financing between 35 and 40 per cent of all newbuildings at their yards for a minimum period of six months. This was done by obtaining credits from three sources, all of which had run dry. The first source was the new business that they booked. For each new contract signed, the yard would get between 10 and 20 per cent cash as contract commitment charges. This was no longer possible as yards had to give a refund bank guarantee to the prospective buyers. Under current conditions, no prospective buyer was prepared to accept a Korean bank refund guarantee and no Western European bank was prepared to confirm any South Korean bank's refund guarantee, even at astronomical fees of more than 5 per cent of contract values. The second source of credit for yards was their bankers. The banks in South Korea were virtually bankrupt and had no sources of funds, hence yards could not get funding from them. The final source of credit for shipyards was their contractors. In normal times they would step in with men and material and allow a reasonable period of time for the yards to settle their bills. But this was not the case now.