Non-residential construction sites, such as offices and logistics centers, will also be able to receive project financing (PF) loan guarantees starting as early as November. Until now, there were no institutions providing PF loan guarantees for non-residential business sites, which raised concerns that issues could escalate in the event of defaults.
The Ministry of Land, Infrastructure and Transport announced on the 4th that a revision to the Construction Industry Basic Law, which expands the guarantee business targets of construction mutual aid associations to non-residential real estate development companies, has passed the National Assembly.
The revised law allows mutual aid associations to provide guarantees to clients (PF loan debtors) that have entered into contracts with members (construction companies) in order to address the blind spots in PF loan guarantees.
The Ministry of Land, Infrastructure and Transport noted, "If a mutual aid association with high creditworthiness provides PF loan guarantees for non-residential business sites, which are profitable but struggling with funding due to instability in the construction market, financing costs will decrease. It is also expected to reduce excessive credit enhancement demands on construction companies, such as joint guarantees and accountability for completion." The construction mutual aid association has already prepared guarantee products targeting the developers of non-residential business sites.
With this revision of the law, the claim procedure for mutual aid medical compensation for the insured has also been streamlined. Until now, they had to obtain documents from hospitals and submit them separately to the mutual aid association. However, moving forward, submissions can be made directly in electronic form through the hospital.
The revision to the Construction Industry Basic Law will take effect three months after the date of promulgation, following review by the Cabinet.