'Stop profits from flowing out and revive the local economy'... Yeosu moves to curb out-of-town construction giants from monopolizing contracts

【Financial News | Yeosu = Hwang Tae-jong, Reporter】Yeosu is breaking up the pattern of large construction companies from outside the region monopolizing contracts, in a bid to keep profits from construction projects in the Yeosu area from flowing elsewhere and to revive the local economy.
To that end, the city is comprehensively revising the 'Yeosu City Ordinance on Promoting the Revitalization of the Local Construction Industry' and will begin implementing it in earnest next January.
Yeosu Mayor Seo Young-hak emphasized, "The expanded participation in prime contracting and subcontracting under this ordinance revision will naturally lead to increased purchases of local materials, equipment rentals and hiring of local workers, restoring a 'virtuous-cycle ecosystem for local capital.'"
He also said, "We expect that when on-site workers have more money in their pockets, this will ultimately lead to broader economic benefits, including revitalizing commercial districts in our city of Yeosu and preventing population outflow."
According to Yeosu City on the 3rd, major construction projects—including industrial complexes, apartment complexes and tourism complexes—have continued in the Yeosu area. However, large construction companies from outside the region have snapped up most of the contracts, and even subcontracting work has gone to companies in other regions. As a result, an "imbalanced profit structure in which permits are issued in Yeosu but the real profits flow elsewhere" has long been cited as a chronic problem.
In particular, although a relevant ordinance was in place, it was effectively toothless because there was no substantive oversight of its implementation. Local general and specialized construction companies had been shut out of the prime contracting and subcontracting process or had faced pressure to take on contracts at low prices.
The city has therefore decided to improve the ordinance's effectiveness through revision and directly overcome the legal constraints that make it difficult for local governments under higher-level laws to impose uniform subcontracting ratios, using proactive administration and incentives.
First, for public projects, the city will introduce a 'subcontracting target management system' under which the ordering department directly monitors and controls compliance, ensuring that the public sector serves as a strong catalyst.
For large private-sector projects, the city will encourage developers to sign 'win-win agreements (MOUs)' and submit 'implementation plans' from the initial permitting and approval stages. It will provide strong incentives, including expedited administrative support and awards, to developers that faithfully carry them out.
The revised ordinance also significantly strengthens its provisions. To ensure fair order in the construction market, it reinforces the responsibilities of local construction companies to eliminate shoddy and illegal transactions, unpaid wages and rental fees, and to actively encourage the use of local workers, equipment and materials.
The city has also established a legal basis for local companies to sign 'win-win agreements' with construction companies from other regions to broaden local participation. It will require 'subcontracting win-win implementation plans' for city-commissioned projects and from institutions funded or established by the city, as well as from private investment project operators. For private investment projects, the results of consultations will be incorporated into approval conditions and agreements to ensure they are effectively binding.
The city will also actively encourage local construction companies to account for at least 49% of joint contracts and at least 70% of subcontracting, while promoting greater joint participation and direct construction by private development projects. In particular, to encourage large companies from outside the region to contribute to local cooperation, the city has expanded eligibility for awards from local companies alone to all construction companies and others.
Yeosu City also plans to expand inspections to include private construction projects that have obtained permits and approvals, and to encourage companies to comply voluntarily by requesting relevant documents and publishing the results on the city's website to improve transparency.
Mayor Seo Young-hak said, "We will complete the '2027 Plan to Promote the Revitalization of the Local Construction Industry' this December and, after notifying the relevant departments, fully launch the 'Subcontracting Management System' on site starting next January, moving in earnest to realize a 'Yeosu-style win-win economy.'"
[email protected] Hwang Tae-jong Reporter