Jeonnam Provincial Assembly Member Kim Ki-tae: Construction Industry in Crisis, Urgent Need for Regulatory Relaxation and Improvement

Realization of Difficulties Such as Funding... Government Support Needed Including Temporary Reimplementation of Capital Gains Tax Reduction

[Asia Economy Honam Reporting Headquarters Reporter Kim Chunsu] Due to the government's real estate regulation policies and the aftermath of COVID-19, difficulties such as financing for local small and medium-sized construction companies are becoming a reality, necessitating practical countermeasures.

On the 12th, Kim Gitae, a member of the Jeonnam Provincial Assembly, stated, "Since the beginning of this year, the construction industry's worries have increased due to the government's high-intensity real estate regulation policies such as loan restrictions, strengthened investigation of funding sources, and increased comprehensive real estate tax rates, compounded by the prolonged COVID-19 situation."

He continued, "The difficulties in the construction industry that began with the COVID-19 situation are only the beginning. In the long term, the gap between financially sound large construction companies and small and medium-sized construction companies will widen, intensifying the rich-get-richer, poor-get-poorer phenomenon."

According to the Housing Industry Research Institute, the financing outlook index for April fell to 59.7, down 16.3 points from March, dropping below the 50-point threshold.

Additionally, the closure rate of general construction companies has increased. The Construction Industry Knowledge Information System (KISCON) reported that 36 construction companies filed for closure in March, a more than 70% increase compared to 21 companies in March last year. This is the highest number in eight years since 39 closures in 2012.

In particular, as the government senses the prolonged COVID-19 situation and prepares 7 trillion won in emergency disaster relief funds, there are signs of budget cuts for SOC projects, which is expected to deepen the recession in the construction industry.

Assemblyman Kim Gitae said, "Many local small and medium-sized construction companies are facing severe management difficulties due to the impact of COVID-19," and proposed, "Considering the COVID-19 situation, the government urgently needs to re-implement temporary capital gains tax reductions, reduce acquisition and transaction taxes, and exclude the application of credit screening guidelines for balance loans to convert all interim payment loans into final payments."

He concluded, "As the economic shock from COVID-19 is severe and prolonged, it is time for the government to encourage the construction industry through support rather than regulation," and urged, "Bold structural reforms at the government level are needed so that the economy, led by the construction industry, can vigorously recover."

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