Construction Association: "Missing the Right Time for SOC Investment Increases Fiscal Burden... Budget Expansion Needed"

Construction site safety inspection / Photo by Busan Port Authority

[Asia Economy Reporter Noh Kyung-jo] The Korea Construction Association announced on the 17th that it has requested the National Assembly to expand the budget allocation for social overhead capital (SOC). It emphasized that this is essential to overcome the ongoing economic slowdown, achieve balanced regional development, and lay the foundation for becoming a global leading nation.

Previously, the government shifted its national policy direction to a sound fiscal stance and reduced the 2023 SOC budget by 10.2% (from 28 trillion won to 25.1 trillion won).

In response, the association stated, "If the optimal timing for SOC investment is missed, social costs such as public inconvenience and productivity decline will increase, resulting in an even greater fiscal burden." It added, "In a situation where stagflation (economic recession + inflation) is a concern, expanding the SOC budget is urgently needed."

They also cited the report titled "Stagflation Crisis, Direction of SOC Investment" published by the Korea Construction Industry Research Institute in May. The report stated, "The appropriate scale of SOC investment to achieve a 2.5% economic growth rate in 2023 is 58 trillion won (including government, local governments, private investment, and public enterprises), requiring a government SOC budget allocation of over 32 trillion won."

They pointed out that the domestic and international economic environment is deteriorating due to soaring raw material prices and rapid global interest rate hikes amid the difficult situation for the low-income economy caused by COVID-19.

The association explained, "To overcome the economic crisis and enhance national competitiveness, it is necessary to expand SOC investment, which is the most effective for economic growth and job creation, to provide jobs for socially vulnerable groups." It added, "By developing infrastructure, we can proactively respond to changes in the economic environment in the post-COVID era and improve the efficiency of industrial activities."

They also viewed it as effective in overcoming the crisis of local extinction. The association said, "To realize the new government's national vision of 'an era where every region in the Republic of Korea is a good place to live,' expanding SOC investment is essential." It stated, "By expanding infrastructure in underdeveloped areas to greatly improve transportation convenience and industrial activity conditions, it is possible to attract corporate investment, create jobs, revitalize the local economy, and achieve balanced national land development."

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