FTC Achieves Early Payment of 3.5 Trillion Won in Subcontracting Fees Before Holidays

Operation of Unfair Subcontracting Reporting Centers for 50 Days
Unpaid Amounts of 10.38 Billion Won at Hyundai Engineering and 6.06 Billion Won at HJ Heavy Industries Detected

As a result of the Fair Trade Commission's large-scale efforts to encourage payment of subcontracting fees to support small and medium-sized subcontractors facing cash flow difficulties ahead of the Lunar New Year holiday, it was found that the early payment of a total of 3.5 trillion won in fees was achieved.

Hyundai Engineering headquarters building that was subject to an on-site inspection by the Fair Trade Commission for failing to pay subcontracting fees on time. The Asia Business Daily DB.

According to the Fair Trade Commission on February 26, from December 26 last year to February 13 this year, it operated "Unfair Subcontracting Reporting Centers" at 10 locations nationwide for 50 days. This measure was intended to resolve the management difficulties of small and medium-sized companies, whose demand for funds such as wage payments surges ahead of the holidays, but which are unable to receive their subcontract payments on time.

As a result of the operation, a total of 330 consultations were received, and 182 small and medium-sized subcontractors were actually able to receive about 23.2 billion won in payments that had not been paid to them. In the cases of Hyundai Engineering and HJ Heavy Industries, separate on-site inspections confirmed that subcontract payments had not been made, and measures were taken to have them pay subcontract fees and delay interest of 10.38 billion won and 6.06 billion won, respectively.

Separately from operating the reporting centers, the Fair Trade Commission also requested early payment of subcontracting fees from major large corporations and mid-sized companies. In response, 106 companies brought forward payments that had originally been scheduled after the Lunar New Year. Through this measure, a total of 3.4828 trillion won in funds was released to 23,766 small and medium-sized subcontractors before the holiday.

During the reporting center operation period, the Fair Trade Commission plans to promptly induce voluntary corrective actions so that payments, including delay interest, are made for cases that exceeded the statutory payment deadline. For companies that do not comply, it plans to conduct separate on-site investigations. In addition, it intends to focus its efforts on establishing a practice in which subcontract payments are made on time not only during holidays but also under normal circumstances.