FKI Proposes Raising Preliminary Feasibility Threshold to 100 Billion Won, Submits 20 Construction Regulatory Reform Requests

The Federation of Korean Industries announced on July 9 that it had submitted 20 regulatory improvement proposals aimed at revitalizing the construction industry to the Office for Government Policy Coordination and the Ministry of Economy and Finance. These proposals focus on four main areas: expanding housing supply and promoting investment, revising safety and environmental regulations, improving bidding and contract systems, and strengthening productivity support.

One of the key recommendations is to raise the standards for preliminary feasibility studies. The Federation argued that the current thresholds of a total project cost of 50 billion won and at least 30 billion won in government funding should be increased to 100 billion won and 50 billion won, respectively.

The Federation pointed out that, although Korea's nominal GDP has more than quadrupled since the preliminary feasibility study system was introduced in 1999, the standards have remained unchanged, resulting in excessive time required for project reviews. The Federation also called for the activation of the "fast-track preliminary feasibility study" system for projects requiring expedited processing.

To expand housing supply, the Federation proposed enacting a "Special Act to Promote Reconstruction and Redevelopment." It stated that, in order to shorten project procedures and accelerate urban renewal projects, it is necessary to ease regulations on floor area ratios and building height.

The proposals also included measures to secure greater flexibility in workforce management. The Federation argued for expanding the employment of unskilled foreign workers (E-9) in the construction sector and easing restrictions on movement between construction sites. Additionally, it recommended improving the system to compensate contractors for indirect costs incurred when construction periods are extended in long-term government-ordered projects.

Lee Sangho, head of the Economic and Industrial Division at the Federation, emphasized, "The construction industry is a leading sector with high production and employment creation effects. Boldly revising construction regulations is essential to reinvigorate the overall economy."