Seoul City Adjusts Timing for Urban Railway Bond Purchases... Reforming a 45-Year-Old System

The Seoul Metropolitan Government announced that it has amended the "Seoul Metropolitan City Urban Railway Bond Ordinance Enforcement Rules," changing the purchase timing of urban railway bonds (construction work sector) from the previous "contract signing time" to "payment time," and promulgated and enforced it as of the 19th. This change is an improvement to a system that has been in place for 45 years.

The change in the timing of urban railway bond purchases was proposed as a pending issue by the Korea Federation of Small and Medium Business and the Korea Specialty Contractors Association during a meeting between Mayor Oh Se-hoon and the Korea Federation of Small and Medium Business last year. Mayor Oh instructed that it be reviewed in a way that supports small and medium enterprises and small business owners during the economic crisis.

Accordingly, with the amendment to the ordinance enforcement rules effective from the 19th, the timing of urban railway bond purchases has changed from "contract signing time" to "payment time" for the first time in 45 years, which is expected to reduce the burden on small business owners and the construction industry.

Urban railway bonds are bonds issued by the city based on Articles 19 and 20 of the Urban Railway Act to raise funds for the construction and operation of urban railways. Companies and citizens are required to purchase urban railway bonds when registering vehicles, signing construction contracts, or registering construction machinery.

In the construction work sector, urban railway bonds equivalent to 2% to 5% of the contract amount must be purchased. However, since the purchase timing was set at "contract signing time," there has been a long-standing demand for improvement. If the contract amount increases after the initial contract, additional urban railway bonds corresponding to the increase must be purchased. Conversely, if the contract amount decreases or the contract is canceled or terminated due to the fault of the bond purchaser, there were no repayment regulations in the law.

Regarding this amendment, the Korea Specialty Contractors Association stated, "It has been a great support to those working in the specialty construction industry during difficult economic conditions," and the Korea Federation of Small and Medium Business said, "We welcome the long-awaited improvement of the urban railway bond system."

Yoon Jong-jang, Director of the Seoul Metropolitan Government Urban Transportation Office, said, "The amendment to the urban railway bond ordinance enforcement rules is a practical support measure for small business owners and SMEs, and although it is a minor change, its effect is significant," adding, "Seoul will continue to actively pursue the philosophy of 'creative administration' that improves inconveniences and wrong practices in areas closely related to citizens' lives and creates meaningful changes."

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