Iman-gyu, Chairman of Daegu City Council, "If Raw Material Prices Rise, Public Institution Supply Prices Must Also Be Raised Immediately"

Submission of Proposal to the Association of Provincial Council Chairs

Original Plan Passed ... Notified to the Ministry of Economy and Finance

On the 8th, Lee Mankyu, Chairman of the Daegu Metropolitan Council, submitted the “Proposal for the Activation of the Delivery Payment Adjustment Consultation System and the Leading Implementation in the Public Sector” at the “2023 4th Extraordinary Meeting of the Chairs of City and Provincial Councils of the Republic of Korea” held in Cheongju, Chungbuk, which was passed as originally proposed.

At the meeting, Lee Mankyu, Chairman of the Daegu Metropolitan Council, stated, “Due to the soaring raw material prices caused by COVID-19 and the Ukraine war, the business environment for small and medium-sized enterprises has deteriorated, and the management crisis triggered by raw material prices is spreading throughout industries and the socio-economy.” He added, “If this situation continues to be neglected, not only will corporate management worsen, but the survival of companies may also be at risk, so the delivery payment adjustment consultation system must be activated.”

Iman-gyu, Chairman of Daegu City Council.

The government has been implementing the delivery payment adjustment consultation system by revising the “Act on the Fairness of Subcontract Transactions” in 2009 and the “Act on Promotion of Mutual Cooperation between Large and Small-Medium Enterprises” in 2019, but the actual utilization rate remains extremely low.

Accordingly, Chairman Lee of the Daegu Metropolitan Council emphasized that in order to organically respond to external factors such as rising raw material prices and to create a healthy industrial ecosystem, an institutional foundation that provides various incentives such as tax benefits and preferential treatment in procurement contracts to activate delivery payment adjustment consultations must be established as soon as possible.

Chairman Lee particularly argued that in the case of public procurement, considering the situation of companies silently accepting the burden of increased manufacturing costs, local governments that actively implement contract amount adjustments due to rises in raw material prices should be given financial incentives, and delivery payment adjustment consultation performance should be reflected in incentives. He stressed the urgent need to establish a public foundation so that public efforts can spread throughout the market.

A Daegu Metropolitan Council official said, “In public procurement, although raw material prices have risen, delivery prices have not increased, causing difficulties for companies. The core of this ordinance is that delivery prices should be immediately raised when raw material prices increase.”

This proposal passed the council’s resolution as originally proposed after the consultation process and is scheduled to be officially submitted as a proposal from the Chairs of City and Provincial Councils of the Republic of Korea to the Ministry of SMEs and Startups and the Ministry of Economy and Finance in the near future.

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