Han Seung-gu, head of the Construction Association of Korea, said he will speed up institutional improvements to secure reasonable construction periods and costs to revive the sluggish construction market and resolve safety issues.
Han Seung-gu, head of the Construction Association of Korea, stated accordingly at a press briefing held on the 11th. At the briefing, the association disclosed the performance on 12 key issues it is pursuing and plans for next year. The key issues are: ▲ securing reasonable construction periods and costs (safety expenses) ▲ preparing grounds to adjust contract amounts for price fluctuations in private-sector projects ▲ expanding the SOC budget to revive the economy and activate construction investment ▲ expanding infrastructure welfare by revitalizing private investment projects ▲ revitalizing the construction economy by resolving the backlog of unsold homes ▲ revitalizing the supply of dwellings by promoting redevelopment projects and easing regulations.
The association said it proposed improving the system for reasonable construction costs to enhance facility quality and safety and to invigorate the construction market, and as a result, the minimum successful bid rate under the qualified evaluation system was raised by 2 percentage points this year. The minimum successful bid rate is the lowest bid price ratio required to pass the qualified evaluation in the bidding process. If the successful bid price is set too low, it can lead to shoddy construction, so a floor for the lowest price is set in advance.
The association said it is conducting research with the Construction Industry Research Institute to secure reasonable construction periods and costs. The goal is to establish rational adjustment standards for everything from calculating and verifying construction periods and costs, to price fluctuations during construction, to design changes. In addition, it plans this year to push measures to pay additional costs for extensions of total construction periods in long-term continuing projects, to establish institutional mechanisms to properly reflect estimated prices, and to make construction costs more realistic by advancing the project cost estimation system.
At the briefing, Han also said, "We will continue to propose measures to boost national economic vitality, such as expanding construction investment to strengthen infrastructure and resolving unsold inventory, and we will strive to ensure the construction industry can contribute to a new leap forward for our economy." The association plans to propose allocating the social overhead capital budget at 30 trillion won or more to achieve next year's economic growth rate of 2.5%. Based on the study "funding measures for 'aged infrastructure,'" it will also push to propose amendments to the Infrastructure Management Act.
To clear unsold inventory in the Seoul metropolitan area, the association plans to request expanding the Korea Land & Housing Corporation (LH) program to purchase unsold dwellings and easing the criteria. The main point is to expand LH purchases from 8,000 units to 12,000 units by adding half of the unsold units after completion in provincial areas. It also includes expanding a program in which the Korea Housing & Urban Guarantee Corporation (HUG) purchases unsold apartments in provincial areas before completion with a buyback condition and then resells them to the project operator after completion. It will also push for the swift passage of tax support bills for purchases of unsold units in provincial areas. The key measures include up to a 50% reduction in acquisition tax and a full exemption from capital gains tax for five years. It will also push to ease the debt service ratio (DSR) stress test in consideration of the provincial housing market.
To revitalize urban redevelopment projects, it will also push legislation for expedited permitting support, easing regulations such as floor area ratio, support for mediating construction cost disputes, and raising acquisition prices for rental dwellings.