Chungnam, Complete Blockade of 'Paper Company' Entry into Public Construction Projects

[Asia Economy (Hongseong) Reporter Jeong Il-woong] Legal grounds have been established to fundamentally prevent paper companies from participating in public construction projects within Chungnam Province.

Chungnam Province announced on the 15th that the partial amendment to the ordinance on ‘Support for Revitalization of the Construction Industry in Chungnam Region,’ which was primarily proposed by Jeon Ik-hyun, a member of the Chungnam Provincial Council, has been passed and will be implemented starting next year.

The amended ordinance focuses on cracking down on unqualified companies that do not meet registration criteria such as technology, capability, capital, facilities, equipment, office, and guaranteeable amount, as well as unfair trade practices by construction companies.

Based on the amended ordinance, the province will be able to intensively crack down on actions such as failure to meet registration standards, violation of deployment of construction technicians, illegal subcontracting, violation of direct construction obligations, and long-term arrears.

Building on this momentum, the province plans to introduce and fully implement a pre-inspection system starting January 1 next year. The pre-inspection system primarily involves checking whether companies that qualify for eligibility screening among those participating in construction bids ordered by the province meet requirements for capital, office, and technical personnel during the document submission period.

Through this, the province intends to deprive unqualified companies such as paper companies of bidding opportunities and impose administrative sanctions such as business suspension.

Even if a company has been selected as the successful bidder or has signed a contract, if it is judged to be a paper company, measures such as cancellation of the bid and contract termination will be taken.

Hong Soon-kwang, head of the Construction Policy Division of the province, said, “Paper companies cause deterioration in construction quality, poor construction, and safety accidents, hindering the development of the local construction industry. Taking this ordinance amendment as an opportunity, the province will focus on pre-inspections to fundamentally prevent unqualified companies from stepping into public construction sites.”

Meanwhile, as of the end of last month, the total number of general construction companies in the province was 669, an increase of 145 (27.7%) compared to five years ago (524). As a result, the average number of bidders per ordered construction project increased to 287, intensifying competition for contracts.

In particular, in the Ministry of Land, Infrastructure and Transport’s construction industry survey conducted in the province over three years from 2018, 399 violations were detected out of 1,311 cases, resulting in administrative sanctions.

In a sample survey of paper companies conducted independently by the province in the first half of this year, 18 suspicious companies were detected out of 31 companies.

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