Construction Association, "SOC Budget Should Be Expanded to 30 Trillion Won Next Year"

[Asia Economy Reporter Yoo In-ho] The Korea Construction Association has argued that the social overhead capital (SOC) budget for next year should be expanded to 30 trillion won, which is 4 trillion won more than the government’s proposal, to revitalize the economy.

The Construction Association announced on the 27th that it submitted a policy proposal containing this content to the relevant standing committees of the National Assembly and the ruling and opposition parties’ policy committees on the 25th.

In the proposal, the association stated that the global economy is facing difficulties due to the COVID-19 pandemic, and the domestic economy is also expected to stagnate due to a decline in exports. Therefore, it argued that investment in the construction industry, which has a high contribution to economic growth and employment inducement effects, should be expanded as a breakthrough to overcome the crisis.

The association cited data from the Hyundai Research Institute showing that construction investment contributed more than 70% to GDP growth during the 1998 International Monetary Fund (IMF) crisis and the 2009 global financial crisis, emphasizing that "construction investment is an effective policy tool for overcoming crises."

Furthermore, it claimed that construction investment accounts for up to 27.8% of the gross regional domestic product (GRDP), significantly contributing to regional economic development.

The association added that due to the recent heavy rains and other effects of climate change, the deterioration of various facilities is accelerating. It emphasized the need to improve the performance and strengthen safety management of dams (63.5%) and water supply and sewage systems (21.6%), which have a high ratio of aging over 30 years.

It also pointed out the necessity to expand public medical facilities, which account for only 5.7% (224 institutions) of all medical institutions, to respond to unexpected medical crises such as the COVID-19 pandemic.

The association argued that although the government has set the SOC budget for next year at around 26 trillion won, increasing it by 4 trillion won could generate about 7 trillion won in direct and indirect production and create approximately 40,000 new jobs.

An official from the association said, "While major countries initially implemented consumer-oriented fiscal policies during the early stages of the COVID-19 economic crisis, countries like the United States and China are now shifting to investment-oriented fiscal policies such as infrastructure expansion to stimulate the economy. South Korea also needs to attract investment by shifting from emergency relief to economic stimulus through infrastructure projects."