Lee Jae-myung: "Public Construction Projects Under 10 Billion Won Suffer Serious Tax Leakage Due to Standard Estimation Method"

Lee Ji-sa Requests Amendment to 'Standard Market Unit Price Application Ordinance' in Gyeonggi Provincial Council Letter on the 8th

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Lee Jae-myung, Governor of Gyeonggi Province, sent a letter of cooperation to the Gyeonggi Provincial Council, requesting the revision of the ordinance to allow the application of the 'Standard Market Price' for public construction projects under 10 billion KRW.

In the letter dated the 8th, Governor Lee stated, "Although Gyeonggi Province has achieved many results together with the Provincial Council, there are still tasks that have not been properly implemented," adding, "Specifically, the task of eliminating the inflated costs in public construction expenses."

He continued, "The current standard unit price system applied when calculating public construction costs under 10 billion KRW does not properly reflect the frequently changing market prices, making it inappropriate for calculating reasonable construction costs," and explained the background for requesting the ordinance revision: "If this is changed to the Standard Market Price, which reflects market transaction prices, it could lead to significant budget savings."

He emphasized, "Public construction projects are funded by taxpayers' money, and efficient budget execution is an obligation to the sovereign citizens of the province," adding, "Fair and rational calculation of construction costs is the shortcut to preventing budget waste."

He further urged, "There is no reason to refuse something that can be done simply by changing the calculation method," and requested, "Please take an interest in the processing of the ordinance so that taxpayers' money can be used to improve the lives of all 13.8 million residents evenly, and do your best."

The 'Standard Market Price' emphasized by Governor Lee is a system implemented since 2015, announced annually by the government based on market price surveys, but it is currently not applied to projects under 10 billion KRW.

Since the Standard Market Price, which reflects market conditions, tends to be generally lower than the Standard Unit Price calculated by a uniform fixed standard, Governor Lee believes it should be applied to projects under 10 billion KRW as well to eliminate unnecessary inflation.

In fact, when the Standard Market Price was applied to calculate the estimated construction cost for 32 public construction projects ordered by the province over the past two years, it was found that budget savings of up to an average of 4.4% compared to the Standard Unit Price were possible.

In particular, applying the Standard Market Price is expected to eliminate opportunities for exploitative companies, such as fake companies (paper companies), to intervene in the middle, block illegal subcontracting corruption, and have a positive impact on the soundness of the entire construction industry.

Accordingly, since the launch of the 7th local government in 2018, the province has requested the Ministry of the Interior and Safety to revise contract regulations and improve the system, and in October of the same year, submitted a partial amendment to the 'Gyeonggi Province Regional Construction Industry Revitalization Promotion Ordinance' containing these contents to the Provincial Council. However, due to strong opposition from the construction industry, it has been stalled for three years.

A provincial official said, "If the ordinance amendment is processed, it will be an opportunity to prevent unnecessary budget waste and corruption, and to create a fair and sound construction industry," and requested, "We ask the Provincial Council to actively cooperate for the better lives of residents and the future of the construction industry."

Governor Lee's letter was personally delivered to 14 members of the Construction and Transportation Committee, including Chairman Kim Myung-won, by Lee Han-gyu, Deputy Governor for Administration 2 of the province, who visited the Provincial Council on the same day.

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