South Korea to reduce penalties for voluntary reporting of illegal construction subcontracting

The South Korean government has approved amendments to the Enforcement Decree of the Framework Act on the Construction Industry to curb illegal subcontracting. Under the new regulations, construction companies that voluntarily report illegal subcontracting and rectify the violations before administrative sanctions are finalized can receive a reduction of up to 50% in business suspension periods or fines.

The amendment aims to prevent safety accidents, industrial disasters, and unpaid construction wages by encouraging early correction. To prevent delays in enforcement, the Ministry of Land, Infrastructure and Transport will now directly issue administrative sanctions for serious violations based on criteria such as subcontracting amount, work type, and progress rate. Previously, authority was delegated to local governments, which often led to delays due to re-investigations.

Additionally, the cabinet approved amendments to the Saemangeum Project Act. These changes expand the scope of preferential treatment for local companies to include construction engineering services and allow for the private contract supply of developed land to companies selected through a public competition process to promote complex development and investment.