Sejong-si Cracks Down on Local 'Ghost Companies' in Public Procurement Sector

[Asia Economy (Sejong) Reporter Jeong Il-woong] Sejong City will identify disguised registration companies (hereinafter referred to as ghost companies) among local businesses participating in the public procurement sector and proceed with administrative sanctions and contract exclusion procedures.

The city announced on the 11th that it will conduct a "comprehensive survey of ineligible companies in public contracts" from the end of this month until the end of next year. The survey will be carried out in stages by 15 licensing departments, considering urgency and importance according to relevant laws and regulations.

According to the city, as of this month, there are a total of 3,316 companies in 242 industries participating in the public procurement market in the region (1,241 construction companies and 2,075 service companies).

In particular, the number of newly registered companies annually has been increasing: 133 companies in 2017, 159 in 2018, 196 in 2019, and 108 as of July this year.

The problem is that ghost companies are increasing alongside the quantitative expansion of new entrants in the public procurement market. Ghost companies are paper companies that only have an address within the jurisdiction but do not actually exist. The local business community has long demanded thorough investigations of ineligible companies by the city.

The comprehensive survey is conducted at the request of the local business community and aims to protect local companies from market disruption caused by ghost companies in the public procurement market.

First, the city plans to notify all licensed registered companies operating in the region about the survey plan, and then provide advance preparation procedures such as informing the targeted registered companies of the visit schedule and required documents seven days in advance.

Additionally, the city will conduct on-site investigations targeting 1,611 companies in 63 construction and service industries authorized by the city. If a company is found to be ineligible, it will be immediately sanctioned according to relevant laws and excluded from bidding and private contracts.

The on-site investigation will be conducted based on the existence of the company’s location and will examine technical capabilities, facilities, and equipment. At this time, the city plans to form a public-private joint investigation team with related associations to carry out the on-site investigation.

Kim Hyun-gi, Director of the Autonomy and Decentralization Bureau of the city, said, "The comprehensive survey aims to identify ineligible companies such as ghost companies, restrict their participation in public procurement bids, prevent poor construction and quality degradation of deliverables, and maintain fair trade order. The city will firmly respond to ineligible companies to block ghost companies from operating in Sejong in advance and to protect and foster local companies."

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