Mandatory Participation of Local Companies in the 'National Balanced Development Project'

22 Projects Worth 19.6 Trillion KRW This Year with Local Participation
"Contributing to Regional Economic Revitalization and Job Creation"

[Asia Economy Reporter Kwangho Lee] From April 4th next month, participation of local companies will be mandatory in the 'National Balanced Development Project' business. Annually, participation of local companies will be mandatory in 22 projects, including road and industrial complex construction, totaling KRW 19.6 trillion, which is expected to contribute to revitalizing the local economy and creating jobs.

On the 31st, the government deliberated and approved the amendment to the Enforcement Decree of the National Contract Act, which includes these contents, at the Cabinet meeting. This amendment is a follow-up measure to the regional construction economic revitalization plan announced last December and will be implemented from April 3rd.

According to the amendment, the local mandatory joint contracting system will be applied to social overhead capital (SOC) projects within the National Balanced Development Project. This system requires that local companies headquartered in the metropolitan local government where the construction site is located must participate in order to be eligible to bid, and this will be fully expanded to the National Balanced Development Project.

Under current regulations, the local mandatory joint contracting applies only to construction projects under KRW 7.8 billion, but with this amendment, local companies must participate in large-scale projects related to national balanced development to be eligible for bidding.

The projects to which this will apply this year include a total of 22 projects, such as national road and highway construction and industrial complex development, amounting to KRW 19.6 trillion within the National Balanced Development Project.

The government also revised the contract regulations specifying the mandatory participation ratio of local companies to ensure smooth execution of this amendment.

Among the announced projects, those with a strong regional character such as national roads, industrial complex access railways, health, and airports require local companies to participate at 40% or more to be eligible for bidding.

For wide-area transportation networks such as highways and railways, whose project effects extend nationwide, local companies are mandated to participate up to 20%, and the remaining 20% will be encouraged to participate up to a maximum of 40% through additional points during bidding.

However, in the case of turnkey or other technically demanding bids, regardless of project type, only joint ventures with local companies participating at 20% or more are allowed to participate in bidding.

The Ministry of Economy and Finance stated, "This amendment to the Enforcement Decree of the National Contract Act will greatly help the recovery and revitalization of the stagnant local economy," and added, "By mandating the participation of local companies, new jobs will be created in the respective regions."

They also added, "It will contribute to spreading a win-win atmosphere through effects such as technology transfer via collaboration with large construction companies."

This content was produced with the assistance of AI translation services.