Gyeongnam Province Achieves 50% Construction Contract Awards to Local Construction Companies

Announcement of Comprehensive Measures to Revitalize the Regional Construction Industry

Gyeongsangnam-do announced on the 7th that it will increase the construction contract award rate for local construction companies to 50%.

According to Gyeongnam Province, there are about 1,400 general construction companies and about 5,800 specialized construction companies in the province, accounting for 7.4% of the nationwide total.

As of 2021, the construction contract awards for local construction companies amounted to about 3.8 trillion KRW in primary contracts and about 1 trillion KRW in subcontracting, with an award rate below 40%, and the private construction contract award rate did not exceed 30%.

Kim Young-sam, Director of Transportation and Construction Bureau of Gyeongnam Province, is announcing a comprehensive plan to revitalize the local construction industry.
[Photo by Lee Se-ryeong]

On this day’s briefing, the province announced that it will implement a ‘Comprehensive Plan to Revitalize the Local Construction Industry’ to overcome the crisis in the local construction sector and to promote the re-advancement of the construction industry.

The three main strategies of the comprehensive plan are ▲ institutional improvements to expand participation of local construction companies ▲ active joint contract acquisition activities by the province, cities/counties, and private sector ▲ strengthening the capabilities of local construction companies and creating a fair construction market.

The province recommends that the participation rate of local companies in various construction project reviews and approvals be set at 49% or more for joint contracts and 70% or more for subcontracting.

The ‘Gyeongsangnam-do Ordinance to Promote the Revitalization of the Local Construction Industry’ will be amended to establish the basis for implementing split orders for large construction projects over 10 billion KRW.

The province will propose a revision of the ‘Joint Contract Operation Guidelines’ to the Ministry of Economy and Finance so that when the government and public institutions issue local mandatory joint contracts, a certain percentage of subcontracting must also be performed by local companies.

The public-private joint subcontracting task force, composed of the province, cities/counties, and the Construction Association, will be expanded, and financial incentives will be provided to cities/counties with outstanding subcontracting performance by local companies.

Comprehensive Measures to Revitalize the Regional Construction Industry in Gyeongnam Province.
[Provided by Gyeongnam Provincial Government]

Among private construction projects in the province, companies that enter into subcontracting contracts with local companies will be supported with a 50% subsidy on the subcontract payment guarantee fee, the first such support nationwide.

Customized management consulting for local specialized construction companies will be further activated, and consultation meetings inviting large construction companies will be expanded in the second half of the year.

Operations of the unfair subcontracting reporting center, subcontracting status inspections, subcontract contract appropriateness reviews, and administrative sanctions against poor or illegal construction companies will also be strengthened.

Kim Young-sam, Director of the Transportation and Construction Bureau, said, “Local construction companies are facing many difficulties due to soaring construction costs, rising loan interest rates, and instability in real estate project financing (PF). We will actively promote policies to create an environment where local companies can secure more contracts, achieve a contract award rate of 50%, and revitalize the local economy.”

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