Concerted Effort Essential for
Fostering Construction Sector
as Value-Added Industry

Domestic construction industry needs to focus on construction 
management rather than only on construction

The domestic construction industry needs to undergo overall renovations to reposition itself as a futuristic, value-added industry, tiding over difficulties of the past and the present, including lack of competitive edge, a ranking official of the Ministry of Construction and Transportation (MOCT) said.
Han Man-hee, director-general of the Construction Economy Bureau at the MOCT, said, "Despite its higher portion of gross domestic growth, the Korean construction industry still lags behind advanced foreign countries in terms of competitiveness. Some people doubt that the industry could continue to maintain its status as a key industrial field of the nation in the future."In this regard, the government and the industry formed a joint civilian-government task force last year and worked out strategies on the advancement of the construction industry. The industry needs to be overhauled overall in a bid to overcome the crisis of the past and the present and be repositioned as a futuristic, value-added industrial sector, Director-General Han said in an interview with NewsWorld.
Han made the comment on the occasion of Construction Day, which fell on June 18. Diverse events, celebrating the anniversary, were held, including the anniversary ceremony where successful examples of construction were presented and exemplary select people were honored in recognition of their meritorious contributions. They were designed to urge the construction community to spurt for a boom of the national economy in the 21st century and give encouragement to the industry, charged with construction of key infrastructures.
In reality, the construction industry has greatly contributed to economic strides Korea has made since the 70s, stunning the world. Following the development of the industry, construction of such social overhead capital as roads and ports as well as housing has laid a foundation for the development of the economy and the improvement of public living quality. Figures made available in 2004 showed that construction investments accounted for 17 percent of GDP or 118 trillion won, whereas the industry hired 1.82 million people or 8.1 percent of the total, indicating that the construction industry represents a consideration portion of the national economy.
First, Han stressed the need for institutional advancement. "Our construction industry lacks flexibility in production because every function of construction is strictly partitioned. In foreign countries, engineering construction (EC), covering design, construction and supervision, is carried out, whereas Korea's focus on construction entails difficulties in creation of added value and technology development,"he noted.
The construction field employs such diverse regulations as strictly enforced business boundaries between general construction and specialized construction and a given rate of mandatory subcontracting, thus making construction firms it difficult to choose optimum construction methods on a voluntary basis and bringing abut structural inefficiency. Director-General Han said, "It is urgent to institutionalize advanced products systems so as to reposition the construction as an industrial field with value added and a competitive edge.
To this end, he said, the construction industry needs to spur construction management (CM), designed to nourish such comprehensive management capabilities as planning, design and construction, departing from its concentration only on construction as well as carry out steps aimed at raising autonomy in the process of construction by streamlining such regulatory regimes as mandatory subcontracting in accordance with market principles.
Secondly, Han said he understands that it is essential to expand R&D outlays in a bid to enhance a competitive edge in terms of technology, which is closely linked that that of the construction industry. Government statistics in 2004 show that the government budge for R&D outlays accounted for 3.8 percent or 6,084.7 billion won, but the comparable figures for the construction and transportation arena stood at as meager as 0.5 percent or 75.3 billion won. The strategies on the advancement of the construction industry, prepared in 2004, call for raising the percentage of R&D outlays out of the total budget for the MOCT from 0.5 percent to the 3 percent level. Besides, an institutional improvement will have to be made to enhance technological competitiveness, and given the significance of environment, the industry should find ways of developing environmentally-friendly technologies.
Thirdly, he said, the industry should focus on expanding the foundation for growth. To secure a stable supply of manpower and materials, key elements of the construction, is necessary for the development of the industry in the long-term perspective. Such functions as career management and job arrangement will have to be reinforced as means of managing and fostering skilled construction manpower in a systematic fashion, while working conditions and employment terms of construction workers need to be improved as part of efforts to spur an influx of youth.
To stabilize a supply of construction materials and equipment is also significant. As to the issue of securing aggregate, a major material of the construction industry, the industry needs to build up a streamlined system on collecting the material while exploring ways of ensuring public management of aggregate and support for residents. In addition to a survey of a shortage of aggregate, channels of supplying the material should be diversified through reuse and gathering the material from streams.
Fourthly, Director General Han calls for all participants of the construction industry to make a concerted effort in carrying out all tasks in a bid to invigorate the overseas construction industry.
He said the overseas construction sector had been sluggish in the wake of the 1997 Asian financial crisis, but things have changed for a recovery trend since last year. If the trend continues, Han predicted that Korea would surpass $8.5 billion, this year's target of landing orders. However, Han emphasized that the industry should adopt quality-oriented strategies aimed at taking profits to help it advance to a step higher, departing from a quantitative approach on landing orders. To this end, he said, the industry needs to widen overseas presence in such areas as plant, design and engineering, while seeking to foster locally produced materials and equipment as strategic items as part of efforts to raise profits. He also cited such steps as incentives for utilizing advanced foreign technologies in Korea; encouraging overseas construction firms' entry into foreign markets; overhauling assessment systems for providing financial support for implementing overseas projects; and support for the exploration of risky newly emerging markets, including the dispatch of a joint civilian-government survey delegation.

Han Man-hee, director-general of the Construction Economy Bureau at the MOCT

Copyright(c) 2003 Newsworld All rights reserved.
3Fl, 292-47, Shindang 6-dong, Chung-gu, Seoul, Korea 100-456
Tel : 82-2-2235-6114 / Fax : 82-2-2235-0799