[Asia Economy Reporter Joo Sang-don] The government has decided to further expand the scale of government construction investment execution and increase the early execution scale of construction and equipment investment by public institutions to revitalize the regional economy, which has been contracted due to the impact of the novel coronavirus infection (COVID-19), and to boost construction activity.
On the afternoon of the 8th, the government held a joint briefing with related ministries at the Government Seoul Office and announced the 'Domestic Demand Stabilization Plan' containing these measures.
Due to the spread of COVID-19, construction stoppages and delays have occurred, significantly shrinking construction activity and worsening difficulties in the regional economy. In response, the government decided to strengthen the roles of the government and public institutions to reinforce the construction market beyond previous emergency special loans and contract adjustments for damage support.
Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said, "We will advance the government construction investment and public institution construction and equipment investment, originally scheduled for the second half of the year, to the second quarter as much as possible, executing an additional early budget of about 600 billion KRW each, totaling 1.2 trillion KRW." He added, "To ensure funds circulate quickly at construction sites, projects not yet started will be ordered early, advance payments for material purchases will be expanded, and for private investment projects, compensation payments will be made earlier."
Specifically, government construction investment will be advanced and expanded from 14 trillion KRW to 14.6 trillion KRW, focusing on areas such as national roads, railroads, ports, and river maintenance. To this end, projects not yet started will be ordered early, and advance payments for government-purchased materials will be increased. Additionally, resources will be adjusted between projects based on execution rates, and compensation for private investment projects will also be injected early.
The early execution scale of construction and equipment investment by public institutions in fields such as social overhead capital (SOC) and energy will also increase from 30.3 trillion KRW to 30.9 trillion KRW. The SOC sector will expand mainly in highway and high-speed rail construction. Korea Expressway Corporation will increase advance payments for highway construction such as Pohang~Yeongdeok and proceed with early material purchases. Korea Railroad Corporation will order early projects for Pohang~Samcheok and the West Sea Line and also provide advance payments for railroad materials. The energy sector will expand focusing on power plant construction, fine dust reduction, and reinforcement of aging facilities.
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