Busan is good

Busan Metropolitan City Launches Second Round of Support for Subcontract Payment Guarantee Certificate Issuance Fees to Eliminate the Risk of Unpaid Subcontracting Fees

내용

Busan Metropolitan City, led by Mayor Chun Jae-soo, announced that it will launch the second round of the Support Program for Subcontract Payment Guarantee Certificate Issuance Fees tomorrow, July 29.

The subcontract payment guarantee system requires a guarantee institution to make the payment on behalf of a prime contractor when the contractor is unable to pay subcontracting fees. It is a key safeguard for preventing subcontractors from suffering losses due to unpaid construction costs.

Busan Metropolitan City will support prime contractors on privately commissioned projects that have entered into subcontract agreements with local construction companies by covering fees for issuing subcontract payment guarantee certificates.

Through this initiative, the city plans to establish the subcontract payment guarantee system at privately commissioned construction sites, protect local small and medium-sized construction companies, and increase the share of subcontracts awarded to local businesses.

Eligible applicants are prime contractors that have entered into new subcontract agreements with Busan-based construction companies on privately commissioned construction projects within Busan on or after January 1, 2026.

There are no restrictions on the registered location of the prime contractor, while subcontractors must be companies registered in Busan.

The city will cover 50 percent of the fee for issuing a subcontract payment guarantee certificate, up to KRW 30 million per company.

On July 14, the city provided KRW 22 million in financial support for 11 applications received during the first round of the program. The total value of the corresponding guarantees reached KRW 3.6 billion.

Reflecting feedback from construction sites, the city amended the Busan Metropolitan City Ordinance on Promoting the Local Construction Industry in December 2025 to establish the legal basis for the program.

Unlike publicly commissioned projects, privately commissioned projects have generally not included subcontract payment guarantee certificate issuance fees in construction costs. In addition, the obligation to issue such certificates has routinely been waived through direct-payment agreements with project owners, an exception permitted under the Framework Act on the Construction Industry and the Fair Transactions in Subcontracting Act.

As the recent downturn in the construction industry has led to a growing number of cases in which the financial soundness of both prime contractors and project owners has deteriorated, the local construction industry has repeatedly called for support for guarantee certificate issuance fees to establish the subcontract payment guarantee system in the private construction sector.

Applications may be submitted in person at Busan City Hall or by mail. Further details are available in the Notices and Announcements section of the city website at https://busan.go.kr/nbgosi.

For in-person applications, visit the Construction Administration Division on the 26th floor of Busan City Hall. Postal applications should be sent to the Construction Administration Division, Busan City Hall, 1001 Jungang-daero, Yeonje-gu, Busan 47545.

Meanwhile, beginning August 11, the amended Fair Transactions in Subcontracting Act will require subcontract payment guarantees for all construction subcontracting transactions except small-scale projects valued at KRW 10 million or less.

Accordingly, the city expects the Support Program for Subcontract Payment Guarantee Certificate Issuance Fees to further encourage subcontract agreements with local companies.

Im Gyeong-mo, Assistant Mayor of the Urban Innovation and Balanced Development Office, said, “With subcontract payment guarantees becoming fully mandatory, we will actively support the local construction industry so that it can adapt smoothly to the institutional changes.”

He added, “We will continue to implement practical, field-oriented policies to establish a fair subcontracting environment, strengthen the operational stability of local construction companies, and revitalize the local construction industry.”