Gov't announces plan to ease burdens on construction companies amid slowdown

Home > Business > Economy

Gov't announces plan to ease burdens on construction companies amid slowdown

Published: 23 Dec. 2024, 17:35 Updated: 23 Dec. 2024, 17:58

SHIN HA-NEE
[email protected]

Audio report: written by reporters, read by AI

A construction site for an apartment complex in Seoul on Sept. 5 [NEWS1]

With the construction sector's protracted slowdown expected to weigh heavily on domestic demand well into the first half of next year, the government outlined new plans to alleviate cost burdens and ease budget regulations for construction companies.

The plan was announced on Monday during a ministerial meeting on economic affairs, along with other policy measures to boost Korea’s industrial competitiveness.

"The Korean economy is facing growing concerns of deterioration of livelihoods due to the weakening economic sentiments triggered by growing internal and external uncertainties amid the sluggish domestic demand recovery,” said Finance Minister and Deputy Prime Minister Choi Sang-mok during the meeting held at the government complex in central Seoul.

"The government will place the utmost priority on improving livelihoods in next year’s Economic Policy Direction, mobilizing all our resources to achieve the goal,” said Choi.

To revitalize the sluggish construction sector, the government aims to “implement improvement measures that can deliver tangible impact immediately,” according to the minister.

The plan includes alleviating excess cost burdens for construction companies, which have been grappling with soaring costs, especially with state-funded projects, by easing budget rules on overhead expenses and refining the inflation adjustment criteria so that increased costs can be appropriately reflected in compensation.

The funding for construction project financing loan guarantees will be upped from the current 35 trillion won ($24 billion) to 40 trillion won to ensure a stable liquidity inflow.

Construction investments have been on a quarterly decline since the fourth quarter of last year, mainly due to soaring costs and high interest rates, which have significantly suppressed domestic demand recovery.

Moreover, the government also announced its plan to revive the slowing petrochemical industry, which has been grappling with an excess supply in the global market.

The government aims to incentivize petrochemical manufacturers to restructure their businesses and help companies diversify their business portfolio into sustainable and high-value-added products.

BY SHIN HA-NEE [[email protected]]