The construction industry welcomed the government's announced 'Measures to Revitalize the Construction Industry.'
On the 23rd, the Korea Construction Association issued a statement saying, "A significant number of the industry's long-standing demands have been included," and added, "We expect this to be a great help to the construction industry, which is struggling due to decreased construction investment and soaring construction costs."
On the same day, the Ministry of Land, Infrastructure and Transport announced measures to revitalize the construction industry, focusing on raising the bid rate for public construction projects and realizing construction costs through an increase in the general administrative expense rate. This is a follow-up to the 'Construction Market Recovery Support Measures' announced by the government in March.
The Construction Association stated, "The industry will be able to respond effectively to policies strengthening construction safety and quality," and emphasized, "The attempt to appropriately improve the overall investment environment of the construction industry, including not only public construction costs but also the relaxation of regulations related to financing for real estate project financing (PF) sites, is hoped to act as a catalyst to overcome the stagnation of the private construction market."
They added, "We also hope to closely consult with the government and the industry on remaining improvement tasks, such as raising the bid rate for small-scale construction projects."
The Korea Specialty Contractors Association also expressed in a statement, "Recently, the construction industry is facing a comprehensive difficult situation including high interest rates, high inflation, rising material and labor costs, and insolvency of clients and main contractors," and "We greatly welcome measures that can help the industry overcome the current construction market downturn."
In particular, they expected that ▲realizing the direct construction cost calculation standards through detailed and newly established construction cost adjustment criteria ▲raising the general administrative expense rate by 1 to 2 percentage points for small to medium-sized projects (under 30 billion KRW) ▲and the prompt implementation of measures to stabilize construction costs such as materials and labor would contribute to revitalizing the specialty construction industry.
The Korea Housing Association predicted that the measures would greatly contribute to the normalization of public construction projects. The Housing Association said, "The issue of construction cost increases that were not properly reflected during the period of soaring construction costs will be resolved, alleviating failures and delays," and added, "This will be an important turning point for expanding housing supply and recovering the construction industry."
They also anticipated that measures such as mandating the dispatch of experts to maintenance sites above a certain scale and establishing an Urban Dispute Mediation Committee under the Ministry of Land, Infrastructure and Transport to strengthen mediation functions, which currently exist in local governments, would help minimize delays and stoppages of maintenance project construction caused by disputes.
They continued, "It is most important that follow-up measures such as legal amendments and the preparation of rationalized responsibility completion plans, as announced by the government, are promptly implemented," and added, "The association will also do its best to expand private housing supply and stabilize the housing market."
Additionally, the Korea Housing Builders Association responded positively to the measures, stating, "In addition to expanding public investment, inducing private investment such as supporting financing for PF sites will help the contracted construction industry regain vitality and effectively restore housing supply and demand."
They particularly evaluated that measures such as expanding the PF guarantee scale and including financial costs when converting from bridge loans to main PF loans in the refinancing scope would contribute to the orderly soft landing of the PF market.
Along with this, they pointed out the recovery of housing demand as a prerequisite for normalizing housing supply. They also emphasized the need to immediately abolish the total loan volume system, reduce interest rates for vulnerable groups such as the homeless and those purchasing housing below the national housing scale, and temporarily ease regulations on capital adequacy ratios and reserve fund accumulation until market normalization.
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