'Not an Easy Year'

CAK Chairman Kwon warns of 4 percent decrease in construction project orders this year

Chairman Kwon Hong-sa of the Construction Association of Korea, in his new year's address, said the environment surrounding the construction industry this year will have some bumpy places. Total project orders are expected to total 95.7 trillion won, down 4 percent from last year due to cuts in projects in the areas of redevelopment and reconstruction and various regulations on construction including global real estate taxes and payments on the general public to share the construction cost of basic infrastructure projects. The heated competition due to excessive number of builders, and the shortage of construction projects from cuts in budgets and strengthened regulations on the construction industry will lower the profit for builders. In this difficult year, CAK celebrates the 69th year of its founding, making us renew the pledge to take over the shining tradition left by our seniors in the business that contributed greatly to the economic development of the country and continue to carry on with the tradition to build a golden tower of achievement across Korea.
CAK will spearhead to put away any problems that our members might face with your cooperation and win the trust from the public on our way to promote projects for the new year. The association will play the role of the spokesman for the industry, which will continue to make progress on market principles under rational construction policies. The association will also make efforts to maintain the level of investment in social overhead capital constant and expanding private investment in public projects for continued growth of the construction industry. It will also try to create a new kind of construction projects by combining the IT technology with construction ― U construction ― all in an effort to expand value-added work in the industry.
The association will also work hard on civilian diplomacy to sustain the pace of overseas construction in key areas like the Middle East, CIS, and Africa to diversify the overseas construction market and also to open up the way for our small and medium builders to make inroads into those markets.
CAK will also try to make government policies on construction and real estate to be rational and market-friendly. It will also work on ways to make Korean builders more competitive abroad and sharpen their productivity by renovating the construction productivity system and investment in the development of construction technology and train construction technicians.
The association will work for increased participation of small and medium construction companies in public projects by improving the bidding system and related ones and develop strong measures to weed out insolvent construction firms.
While watching the development of optional measures to curb real estate price increases, we found out that the wall of distrust among the construction industry, social and government circles is high still. We ought to coldly reevaluate our positions before blaming others, the chairman said.
Businesses should pursue ways to maximize profit, but their means are as important to win public trust for their operations. We should make our management transparent and ethical and at the same time, should practice sharing management to help the poor in our society. We should become a leader in the effort.
At the same time, the government should support the construction industry by implementing and maintaining market-friendly policies and make them predictable so that the construction companies can be competitive enough to the extent that those engaged in the industry can work with pride and hope.
Saying, "when you are lost in the valley, go up to higher ground where you can see the roads,"and this year the construction industry is likely to have a hard year with the presidential election coming up in December.
Kwon said he hopes that construction companies would move to higher grounds this year and find new growth engines to make a turnaround to become once again play the role of a horse to pull the growth of the national economy this year. Looking back at last year, the construction industry has had a difficult year. Government investment in construction projects was sluggish, the lowest bidding system was implemented along with regulations on the real estate market, which caused regional economies to slump troubling small and medium builders with the gap growing between small builders and large construction companies.
The government came up with on March 30 and November 15 measures to cool down the spiraling prices of real estate and the real market continue to heat up so much so that it was called, "real estate crisis,"causing the authorities to tinker with anti-market measures such as the upper limit on apartment prices and the disclosure of apartment building costs to curb prices of apartments spiraling out of hand.
Fortunately, however, the industry has done well in overseas sectors with project orders aggregate totaling over $200 billion by virtue of orders last year amounting to over $16 billion, showing to the world the power of the Korean construction industry. nw

Dignitaries led by Prime Minister Han Myeong-sook, 3rd R, MOCT Minister Lee Young-sup, 2nd R, and CAK Chairman Kwon Hong-sa, 4th R, cut a cake to welcome the New Year.