Head of Specialty Contractors Association Says, "Only Specialty Contractors Are Being Hurt by Open Market Access... The Law Must Be Revised"

[Financial News] The specialty contractors association has called for a legal revision, saying that small and mid-sized specialty contractors are suffering because of the construction industry's open market access.
At a press briefing with the Ministry of Land, Infrastructure and Transport beat reporters held on the 1st at the association's Sejong Center in Central Town, Sejong City, KSCA Chairman Yun Hak-su said, "After four to five years of implementing open access, it has been proven to be unreasonable."
Following a legal revision, restrictions on business domains between general contractors and specialty contractors have been gradually lifted since 2021. The change allowed both types of contractors to freely bid on small mixed projects and large single projects, creating direct competition. KSCA pointed out that the scale of projects open to mutual entry between general and specialty contractors differs by about 6.5 times. It said 56.7% of the specialty construction market has been opened, while the opening rate for the general construction market stands at just 8.7%.
Yun said, "Even though the licensing systems are clearly different, general contractors with capital and skilled workers can easily enter the specialty construction market, while specialty contractors, 98% of whose members are small businesses, lack the capacity to enter the general market."
He added, "The structure allows general contractors to win specialty projects and then subcontract them to specialty firms at around 70% of the original value after taking a margin." He emphasized, "If a project worth 100 won is carried out for 70 won, it is difficult to secure quality and safety. In the end, that leads to poor construction, and the damage falls on the public."
At present, bidding by general contractors is restricted for specialty projects worth less than 430 million won, but that measure is also set to expire at the end of this year. The specialty construction industry is calling for the protected zone to be expanded and for the sunset clause to be extended or abolished.
Yun said, "There are currently four related bills before the National Assembly, and we are working with lawmakers and the government to reach an agreement." He also criticized the government's move to expand the application of the standard market unit price. The standard market unit price is a construction cost benchmark calculated based on actual market transaction prices for completed projects, and it is currently used to set estimated prices for public works worth 10 billion won or more. After President Lee Jae Myung raised concerns about the public construction cost calculation method at a State Council meeting in June, the government has been reviewing a plan to expand the use of the standard market unit price to projects worth less than 10 billion won.
In response, the association stressed that it is not appropriate to apply the standard market unit price, which is calculated based on the performance of large-scale projects worth 10 billion won or more, directly to mid-sized and smaller projects.
Kim Hwan-ju, head of the association's management policy division, said, "I understand that, following the president's remarks, the fiscal authorities are considering expanding the standard market unit price to projects worth 5 billion won or more from 2027 and full implementation in 2028." He added, "The standard market unit price is calculated at about 10% below the standard construction cost estimate, so the industry has many concerns."
He said, "With construction costs rising and various regulations in place, applying a market unit price that differs by 10% is realistically difficult." He added, "The industry believes we need pilot projects or a selection of suitable works to ensure practical application on site and move forward gradually. We need to create worksites where safety and quality are guaranteed."
[email protected] Reporter Jung Kyung-soo Reporter