Director Lee holds second meeting with construction industry to hear opinions
"Delaying poor quality issues will be difficult even for large construction companies"
Measures to prevent disadvantages in project feasibility evaluation due to delays from cultural heritage excavations
HUG sales guarantee sites excluded from post-management targets
"If the real estate project financing (PF) defaults are not properly resolved, it could take a considerable amount of time for the PF market to regain momentum. We ask the financial sector and the construction industry to participate cooperatively by sharing losses and working together."
On the 29th, Lee Bok-hyun, Governor of the Financial Supervisory Service, emphasized this in his opening remarks at the second meeting with the construction industry held at the Construction Hall to ensure a soft landing for real estate PF. This meeting was arranged as a follow-up to the meeting held in March to listen to the construction industry's opinions on PF soft landing measures and to request their active understanding and cooperation to ensure the smooth operation of these measures.
Construction industry representatives attending the meeting agreed on the necessity of implementing the soft landing measures but suggested that evaluation criteria should be adjusted to sufficiently consider the diverse situations of individual projects.
They also requested that financial companies be managed to avoid rigid application of evaluation criteria and called for measures to mitigate market shocks caused by the implementation of PF measures, such as expanding guarantees by policy financial institutions and continuously improving the practice of excessive interest and fee charges.
In response, Governor Lee stated that various risk factors are comprehensively considered during project feasibility evaluations, and that reasonable and objective evaluations are possible, including exceptions when the project's uniqueness is recognized.
On the 5th, Lee Bok-hyun, Governor of the Financial Supervisory Service, held a back briefing regarding the Saemaeul Geumgo illicit loan suspicion incident after the signing ceremony of a business agreement between the telecommunications and financial sectors to strengthen response and cooperation against financial crimes infringing on people's livelihood, held at the Korea Federation of Banks in Jung-gu, Seoul. Photo by Jo Yong-jun jun21@
He said, "A significant portion of the construction industry's opinions regarding the revision of real estate PF project feasibility evaluation criteria will be reflected in the revised standards. We will continue discussions with the construction industry at a level that does not undermine the strict principles of PF default resolution and restructuring."
The financial authorities plan to ensure that there are no disadvantages in project feasibility evaluations when projects are delayed due to cultural heritage excavations or contaminated soil treatment, and to exclude Housing and Urban Guarantee Corporation (HUG) pre-sale guarantee projects from post-management such as project sales or liquidation. Cases where evaluation exceptions are possible due to project uniqueness will be further specified beyond urban development projects to include urban renewal projects and publicly supported private rental projects.
He reiterated that since the overall PF project feasibility has deteriorated, the resolution of defaulted projects can no longer be postponed. Governor Lee stated, "If default resolution is continuously delayed, even large construction companies may face difficulties that are hard to manage in the future. If real estate supply contracts, it could cause difficulties in the real estate market's supply and demand, so default resolution is essential for market stability."
He also conveyed that a task force (TF) to improve PF fee systems and practices, involving not only finance but also the construction industry, is being operated to minimize the impact on the construction sector. Governor Lee said, "The restructuring and resolution of real estate PF, which involves various stakeholders, is a challenging task. We are pursuing multifaceted measures to strengthen funding support for projects that can be normalized, such as syndicated loans."
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