The Anti-Corruption and Civil Rights Commission Halts Facility Business Abolition Plan: "Further Discussions with the Industry Needed"

Kwonikwi "Facility Business Abolition Deferred Until 2029" Resolution

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] It has been confirmed that the Anti-Corruption and Civil Rights Commission (ACRC) has put the brakes on the Ministry of Land, Infrastructure and Transport’s (MOLIT) plan to abolish the Facility Maintenance Business (Facility Business), a key part of the ongoing restructuring plan for the construction industry, by stating, "Postpone the abolition timing and conduct further discussions." During the process of preparing the restructuring plan to remove the sectoral boundary regulations between general construction and specialized construction businesses, a dispute arose among industries over how to handle the Facility Business. Although the issue was tentatively settled by abolishing the sector, if re-discussion proceeds, the framework of the restructuring plan could be shaken.

According to the construction industry and the ACRC on the 5th, regarding the objection to the abolition of the Facility Maintenance Business filed by 24,535 workers in the sector on the 28th of last month, the ACRC resolved to "defer the validity period of the Facility Business until the end of 2029 and discuss detailed implementation measures."

The reason MOLIT has been working on restructuring the sectors and industries since 2018 was to resolve the dysfunction caused by the sectoral boundary regulations between general construction and specialized construction businesses that have blocked mutual market entry for the past 40 years. MOLIT consolidated 28 out of 29 types of specialized construction businesses into 14 major sectors and allowed free mutual market entry regardless of whether it is specialized or general construction. The only specialized construction business that was not consolidated was the Facility Maintenance Business. MOLIT planned to abolish the Facility Business and required existing companies to convert to either general or specialized construction businesses by the end of 2023. This led to opposition from the Facility Business sector. They argued that since they had only been performing maintenance and repair work on completed facilities, suddenly converting to a sector that includes new construction work would cause management difficulties or ultimately force them to close down.

This ACRC decision is regarded as a "complete victory" for the Facility Business sector. The sector claimed that MOLIT did not properly listen to industry opinions, as MOLIT had agreed in the August 2019 meeting on construction industry restructuring to discuss the handling of the Facility Business later but suddenly notified the abolition decision in January the following year. The ACRC acknowledged all these claims.

The ACRC also sided with the industry on the issue of the reason for abolishing the Facility Business. MOLIT cited the controversy over the "all-purpose license" as the reason for abolition, but the ACRC stated, "The all-purpose license controversy was raised regarding civil engineering and construction businesses, but since the registration requirements for civil engineering and construction businesses have been strengthened and protected, it is difficult to see the all-purpose licensing as a reason for abolishing the Facility Business."

MOLIT argued that the Facility Business sector performed all types of construction work and thus had limitations in expertise, but the ACRC judged, "Since general construction sectors also perform all types of construction work, this cannot be applied only to the Facility Business." The ACRC added, "Considering the increasing proportion of aging facilities among large social overhead capital (SOC) facilities and the importance of facility maintenance, a cautious approach is needed regarding the abolition of the sector."

The ACRC recommended deferring the abolition of the Facility Business until the end of 2029 and gathering more industry opinions to devise solutions by then. The end of 2029 is the deadline set by MOLIT to ease the burden on small Facility Business companies by allowing sector conversion while exempting them from obligations to meet additional capital or technical personnel registration requirements.

Although the ACRC’s recommendation is not mandatory, it cannot be easily ignored. This decision is expected to have considerable influence on other ongoing related matters. A constitutional review on the administrative legislative inaction, claiming that the government’s abolition of the Facility Business violated the Facility Safety Act, is underway. Additionally, bills proposed by members of the People Power Party to convert the Facility Business into a special sector under the Facility Safety Act are currently pending in the National Assembly.

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