Research Reports

Korea is expected to undergo a major change in the construction industry as the economic growth and population structure are matured. The examples are the abolishment of restrictions on the scope of business between general and specialized construction companies, the possibility of opening construction guarantee market, increasing demand for overseas construction guarantee, growth of home guarantee market, or guarantee on infrastructure funding, and increased demand for finance-related services. The purpose of this study is to suggest the direction of guarantee product development to meet the new environment of construction market and to achieve the long-term vision in favor of the Construction Guarantee. The Construction Guarantee has provided 770 trillion won in construction related guarantees by the end of 2017, contributing greatly to the credit enhancement of the construction industry and the expansion of construction market. The major products are predominantly sorts of performance guarantees in construction projects. It is derived that the Construction Guarantee may consider for expanding 22 new candidate products such as lease home guarantee insurance, rent payment guarantee, and so on, based on the comparison with the Korea Housing & Urban Guarantee Corporation, the Seoul Guarantee Insurance, and the Korea Infrastructure Credit Guarantee. Among these candidates, we selected the guaranteed products that are expected to have high growth potential, and then we evaluated the risk of the candidate guaranteed products. And additionally, the compatibility with the long-term development strategy is reviewed to finally determine direction for new guaranteed product development. As a result, a construction project financing guarantee, and a specifically customizable warranty are selected as the development direction of the guarantee product that should be promoted first. Next priority items are PF loan guarantees for overseas infrastructure investment projects, bid/performance bonds for overseas construction projects, and credit bureau services for overseas guarantee institutions, which may be considered for the development of new guaranteed products additionally. In order to expand the market, it is also necessary to expand the scope of members including individuals with quasi-union system. Further activities for developing individual guarantee products must be followed to ensure the consistency and efficiency of the management strategy after the development direction for the new guarantee product is approved.