Construction companies that voluntarily report and rectify illegal subcontracting will now be eligible for reductions of up to half on business suspensions or penalty surcharges.

The Ministry of Land, Infrastructure and Transport announced that a partial amendment to the Enforcement Decree of the Framework Act on the Construction Industry containing these measures was approved during a Cabinet meeting today (the 15th).

The amendment establishes legal grounds to reduce business suspension periods or penalty surcharges by up to half, provided that the company voluntarily reports the illegal subcontracting within a period determined and publicly notified by the Minister of Land, Infrastructure and Transport, and rectifies the violations before administrative dispositions are finalized.

While early rectification is necessary to prevent safety accidents, industrial disasters, and unpaid construction fees caused by illegal subcontracting, there had previously been a lack of mechanisms beyond on-site crackdowns to encourage companies to voluntarily report and rectify violations.

The amendment also includes provisions allowing the Minister of Land, Infrastructure and Transport to directly issue administrative dispositions for severe illegal subcontracting.

Currently, the authority to issue administrative dispositions for illegal subcontracting is delegated to local governments. As a result, even when the Ministry detects illegal acts, it has had to request dispositions from local governments and undergo re-investigations, causing delays in final disciplinary actions.

Moving forward, matters specified in public notices—considering the detecting entity, subcontract amount, construction type, progress rate, and jurisdiction—will be directly handled by the Ministry, while the rest will be handled by local governments.

The amended enforcement decree will take effect four months after its promulgation.

Additionally, an amendment to the Enforcement Decree of the Saemangeum Project Act was approved, expanding the scope of local companies eligible for preferential treatment by Saemangeum project developers.

Under the amendment, construction engineering service contracts pursuant to the Construction Technology Promotion Act have been added to the categories where developers can grant preferential treatment to local companies.

To promote the complex and multidimensional development of Saemangeum, the method of supplying developed land will also be improved.

Developers selected through competitions evaluating business proposals, designs, and aesthetics will now be able to be supplied with developed land via private contracts.

The Ministry expects this to secure procedural fairness while enabling the supply of land tailored to corporate business plans, thereby inducing diverse forms of complex development and corporate investment.

(Photo provided by the Ministry of Land, Infrastructure and Transport, Yonhap News)