The Ministry of Land, Infrastructure and Transport said on the 16th it will roll out a financial support package, including special loan implementation and guarantee fee discounts, in cooperation with the Construction Mutual Aid Association, the Specialty Contractors Mutual Aid Association, and Korea Housing & Urban Guarantee Corporation (HUG), to support the construction industry struggling amid the Middle East war.
The Construction Mutual Aid Association and the Specialty Contractors Mutual Aid Association will offer special loans to help secure liquidity for construction companies facing management difficulties due to the Middle East situation. Each association will operate a 300 billion won program, with the Construction Mutual Aid Association providing up to 100 million won per member and the Specialty Contractors Mutual Aid Association providing up to 500 million won per member.
Depending on each construction company's credit rating, the interest rate will be set in the high 2% to low 3% range annually, enabling funding at a lower expense than market rates.
The Construction Mutual Aid Association plans to complete internal procedures quickly and provide loans in May. The Specialty Contractors Mutual Aid Association will continue operating the Construction Stabilization Special Loan, which has been in place to address the project financing (PF) crisis, allowing immediate loan applications.
In addition, starting in May through the end of this year, the Construction Mutual Aid Association will offer guarantee fee discounts to relatively small members (credit rating BB or below), and the Specialty Contractors Mutual Aid Association will offer them to all members.
To protect partner firms, fees for payment guarantees for subcontract proceeds and for construction equipment lending fee payment guarantees will be discounted by 10% to preemptively prevent a chain liquidity crisis that could arise at construction sites. If an extension guarantee is needed, such as when work is delayed due to raw material supply disruptions, fees for contract guarantees and performance guarantees will be discounted by 30% to support stable project execution.
HUG plans to cut fees by 30% for dwellings presale guarantees and maintenance project financing loan guarantees, which are essential for raising funds for dwellings developers, to ease their burden and prevent a slowdown in the supply of dwellings.
In particular, when PF loan guarantees and presale guarantees are issued together, the fee for the presale guarantee will be reduced by an additional 30%, offering up to a 60% discount on guarantee fees.
The guarantee fee discount will take effect in May following revisions to HUG's internal rules. It will apply not only to newly issued guarantees but also to partitioning-issued guarantees for the remaining project costs at business sites that have already received guarantee approval before the fee reduction.
Construction Policy Director Kim Seok-gi of the Ministry of Land, Infrastructure and Transport (MOLIT) said, "The construction industry is facing difficulties due to concerns over raw material supply disruptions and rising construction costs caused by the Middle East war," adding, "We will work closely with related agencies to minimize the financial burden on the construction industry and prevent project delays."