Construction Companies Make the `Federation`

The reorganization of construction companies will be executed in full scale. The top 50 construction companies have launched to form a `federation` that is separated from the Construction Association of Korea (CAK), and the registration of the insolvent companies under supervision will be cancelled next month.

The top ranking companies has planned to form the Federation of Construction Industries in order to actively deliver their opinions to the government. Ministry of Construction & Transportation(MCT) has viewed positively the establishment of the federation, but the dispute over this issue will generate controversy due to the resistance from the companies in medium standing or the small and medium construction companies.

According to the MCT and construction companies, Korea Federation of Construction Contractors (KFCC) which has remained a private organization without the permission of the Minister of Construction & Transportation, will launch as a corporation aggregate on the civil law soon.

KFCC was established in 1992 and has requested three times thus far for the establishment of a corporate aggregate. But it has failed to receive permission due to the resistance of companies in medium standing.

Minister of Construction & Transportation, Oh Jang-Seop, told that ``the top-50 construction companies requested for the federation separated from the CAK. The Ministry will approve the establishment of the federation``.

``The homogeneity has disappeared among the construction companies which belonged to CAK, because the number of general construction companies increased from 400 (1989) to 10,000 (presently),`` an official of KFCC told. ``Hence, CAK could not speak with the same purpose and the same disposition.`` He added that the conversion of KFCC to a corporate aggregate is necessary for the effective execution of the government policy.

The officials of construction companies in medium standing maintained that the opinions of construction companies could be delivered through the existing CAK. The top-ranking companies are attempting to establish a separated federation in order to enjoy the benefits. That is, the separation of the association will lead to the polarization between large companies, and small and medium companies.

Meanwhile, MCT will begin to reorganize the construction companies, by clearing out the insolvent companies under supervision and supporting the companies with potential competitive edge. MCT exposed 83 companies without an actual result last month, and plans to cancel their registration by the end of June.

Koo Ja-Ryong bonhong@donga.com