Chungnam, Low Participation Rate of Local Private Construction Companies

[Asia Economy (Hongseong) Reporter Jeong Il-woong] The participation rate of local companies in the private construction sector in Chungnam region has been found to be low.

According to Chungnam Province on the 25th, the total scale of construction projects in the province as of last year was calculated at 13.5586 trillion KRW.

By ordering entity, private sector accounted for 9.0141 trillion KRW (66.5%) and public institutions 4.5445 trillion KRW (33.5%). This excludes electricity, information and communication, and fire-fighting construction.

By region, the construction project scale in Cheonan, Asan, Seosan, and Dangjin was 9.5122 trillion KRW, accounting for 70% of the total construction projects in Chungnam. In particular, private construction projects in these four regions were found to be 7.3914 trillion KRW.

The problem is that the private construction project winning rate in these four regions including Cheonan is only 17.3%. This is 2.3 percentage points lower than the overall private project winning rate of 19.6% in Chungnam.

Especially in Seosan, where petrochemical-related industrial facilities are concentrated, private construction projects such as new and expansion plant construction (totaling 3.0525 trillion KRW) are actively promoted, but the amount won by local companies was only 154 billion KRW (5%).

The low winning rate of local companies in projects carried out locally is mainly attributed to the near absence of large construction companies capable of executing large-scale building projects such as apartment complexes, and the low entry barriers for outside companies.

Also, in the case of industrial facility projects such as plants, orders are mainly placed between large corporations and existing partners, which is another main cause.

Accordingly, the province has formed a task force (TF) to increase the winning rate of local construction companies and plans to conduct regular monitoring of winning rates along with joint inspections by the province and city/county governments.

Park Yeon-jin, Director of the Construction and Transportation Bureau of the province, said, “Since participation of local companies in private construction projects is not legally guaranteed, it is necessary to induce local company participation through consultation with project implementers at the permit stage. For this, active cooperation from city and county governments is considered most important.”