South Korea on Wednesday unveiled a financial package worth 820 billion won ($690 million) to help modernize aging passenger boats and cargo vessels.

The package is meant to help smaller shipping companies build 59 new ships -- 21 passenger boats and 38 cargo vessels, the Financial Services Commission said.

Under a plan, a shipping company can receive financial help, up to 60 percent of costs needed for building a ship, from banks, and South Korea's state-run Korea Ocean Business Corp. guarantees more than 95 percent of the loans.

The Korea Development Bank, a policy lender, also funds 20 percent of costs needed for building a ship.

The move is part of South Korea's efforts to strengthen maritime safety and boost the economy.

Finance Minister Hong Nam-ki said the financial package will provide opportunities for local small and medium-sized shipbuilders, which have been struggling with falling orders.

The financial package could help shipping firms increase their competitiveness and revitalize regional economies, Hong said in a meeting with executives of shipping firms at the southwestern port city of Mokpo.

Currently, 58 smaller shipping companies operate 166 passenger vessels, including ferries, to transport about 15 million people between the South Korean mainland and its islands per year, the commission said.

The commission said 780 other shipping companies run 2,013 cargo ships on domestic routes.

South Korea has lowered the maximum life of vehicle ferries to 25 years from the previous 30 years, creating demand for new ships.

At the end of 2018, 22 percent of passenger vessels and 68 percent of cargo ships are more than 20 years old. (Yonhap)