Incheon Port Authority (IPA) has launched an initiative to eradicate illegal subleasing within the port hinterland complex at Incheon Port.
IPA has identified a heightened risk of illegal subleasing of remaining leased land and warehouses by tenant companies, as bulk terminal cargo volumes have declined and the revenues of companies operating in the port hinterland complex have decreased. In response, IPA has developed measures to address this issue.
IPA plans to immediately report any detected cases of illegal subleasing to investigative authorities. Under the Port Act, companies found to have engaged in illegal subleasing, both the original lessee and the sublessee, are subject to imprisonment of up to one year and three years, respectively, or fines of up to 10 million won and 30 million won, respectively.
Additionally, IPA will increase the frequency of regular inspections from once a year to once every quarter and will conduct joint inspections with relevant agencies. The number of ad-hoc inspections will also be increased.
Furthermore, IPA will strengthen penalties for tenant companies found in violation, including imposing disadvantages when reviewing contract extensions, restricting eligibility to participate in future bids for the port hinterland complex, and levying damages according to lease agreements.
Illegal subleasing undermines the public nature of the hinterland complex and disrupts port order by allowing tenants to sublease spaces, which were supplied at lower rents compared to private land, to third parties at higher sublease rates.
Moreover, tenant companies may prioritize increasing revenue through real estate subleasing income rather than generating cargo volumes, which is the intended purpose of occupying space in the hinterland complex.
This ultimately leads to decreased operational efficiency of the port hinterland complex.
Kim Sanggi, Vice President of Operations at IPA, stated, "The port hinterland complex is a national infrastructure asset established to support logistics functions for public purposes and to enhance logistics competitiveness. We will do our utmost to eradicate illegal subleasing, which undermines the public nature and operational efficiency of the port hinterland complex."
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