Civil Construction Costs Surge 42% in Four Years, Deepening Contracting Crisis Civil construction costs have risen sharply this year, with the construction cost index surpassing 140 for the first time since records began. After three years of stability, costs have surged again, creating a widening gap between the estimated prices set during budget planning and actual market costs. Concerns are growing that a 'contracting cliff' will deepen, as construction firms are reluctant to bid despite record SOC budgets. According to the construction industry on June 4, the civil construction cost index reached 142.04 in April, a 6.48% increase from the same month last year (133.39). This marks a 3.29% rise over just four months, from January (137.51) to April (142.04). This is the largest increase since the raw material shock caused by the Russia-Ukraine war in 2022, with a cumulative increase of 41.6% compared to January 2020 (100.29). The civil construction cost index had shown signs of stabilization after the raw material shock in 2022. In April 2023, the index rose by 4.40 points compared to the previous year, but the increase slowed to 2.84 points in April 2024 and 1.43 points in April 2025. However, in April this year, the index jumped by 8.65 points compared to the same month last year, indicating a complete reversal in trend. This surge is attributed to disruptions in raw material supply due to factors such as the Iran conflict. Analysts predict that the rise in construction costs will inevitably have a negative impact on the execution of public civil works budgets. The government has allocated a record 27.5 trillion won for the 2026 SOC budget, a 7.9% increase from the previous year. However, concerns are mounting that the gap between the budgeted construction costs and actual market prices could lead to a situation where projects cannot be initiated despite having funds. The issue of public project failures is already surfacing. According to a report from the National Assembly's Social Dialogue Construction Issues Committee, the failure rate for technical bids, primarily used for large public projects that bundle design and construction, soared from 39% in 2021 to over 70% in the first eight months of last year. This increase is due to the inability to adequately reflect rising costs at the bidding stage, leading to a reluctance among construction firms to take on contracts. With the additional surge in civil construction costs this year, the situation is expected to worsen. The Korea Construction Industry Institute also noted in a report published in February that the surge in construction costs is stifling the industry's profit model beyond mere inflation. The analysis of cost increases from 2020 to 2025 revealed that material costs accounted for the highest contribution at 49.8%, significantly surpassing labor costs (29.2%) and service costs (21.0%). Despite the recurring surge in material costs, the current contract system has failed to keep pace. The adjustment system for contract amounts based on price fluctuations primarily operates on a post-settlement basis, meaning that actual cost increases are not reflected in a timely manner during periods of rapid material price hikes. In public projects, this leads to increased budget uncertainty and heightened risks of audits and disputes, while in private projects, it results in deteriorating project viability and financing difficulties. The Ministry of Land, Infrastructure and Transport has decided to immediately reflect the construction cost index for March in the standard market prices for the second half of 2026. The standard market price serves as the basis for estimating public project costs, and raising it is necessary to align the estimated prices of contracting agencies with market realities. However, industry experts argue that this measure is insufficient to close the gap with market prices. A construction firm representative from the Chungcheong region stated, "If construction costs continue to rise at this pace and the adjustment of estimated prices does not keep up, the failure rate will only increase. No matter how much the budget is increased, the cycle of not executing it on-site will repeat."* This article has been translated by AI. 2026-06-04 16:33:00

Explosion at Hanwha Aerospace plant casts doubt on planned satellite launch SEOUL, June 4 (AJP) - The planned launch of a satellite-carrying solid-fuel rocket off Jeju remains uncertain following an explosion at Hanwha Aerospace's plant in Daejeon that left seven people dead or injured. The Ministry of Employment and Labor raided Hanwha Aerospace’s headquarters in Seoul and its Daejeon plant on Thursday in connection with the fatal explosion. The Ministry of Employment and Labor raided Hanwha Aerospace's headquarters in Seoul and its Daejeon plant on Thursday following the fatal explosion. Hanwha Aerospace said it would suspend production lines at its domestic sites for two days from Thursday to conduct safety inspections and training, saying "safety comes before production." The measure applies to nine sites nationwide, including plants in Daejeon, Boeun in North Chungcheong Province and Yeosu in South Jeolla Province, which produce propellants and charges, as well as its Changwon plants in South Gyeongsang Province, which manufacture K9 self-propelled howitzers, armored vehicles and aircraft engines. R&D campuses in Daejeon, Pangyo and Asan are also included. Hanwha Aerospace has a total of 11 domestic business sites. The Daejeon plant, where the explosion occurred, is known as a key site that produces defense and space-related products, including propellants. Hanwha Aerospace had been working with the Agency for Defense Development to conduct the fourth launch of a solid-fuel space rocket from waters near the Jeju naval base on May 30, but the launch was postponed due to bad weather. However, Hanwha Aerospace has said it is difficult to directly link the accident to the launch schedule, as the project is led by the military and government agencies. "It is difficult to link the two because rockets and weapons are matters involving the military and the government," a Hanwha official told AJP by phone. "For details, you would need to check with DAPA, the military or other state agencies." The official also said the report linking the accident directly to the launch schedule appeared to be "highly speculative," adding, "It is not accurate to make that connection." The Defense Ministry's spokesperson's office also said the delay was so far understood to be related to weather conditions and that no confirmed link had been made to the accident. "As of now, there has been no discussion related to that," an official at the ministry's spokesperson told AJP by phone. "So far, it has been about the weather." The official added that "various conditions" could still be considered, but said no new launch date had been fixed. The Agency for Defense Development succeeded in the third test launch of South Korea's indigenous solid-fuel rocket from waters off Jungmun, Jeju, in December 2023 to verify its capability to place a small satellite into orbit. The upcoming launch would be the fourth test. Hanwha Aerospace is responsible for the launch vehicle, Hanwha Systems for the reconnaissance satellite and Hanwha Ocean for the offshore launch platform. The accident has also raised questions about why an explosion occurred in a process the company had not considered highly dangerous. During a joint briefing on the day of the accident, a Hanwha Aerospace official said, "The process involved in today's accident had not been recognized as highly dangerous." The explosion reportedly occurred in a cleaning room in Building 56, where tools used in the production of solid propellant for rocket launch vehicles were washed with water and detergent. A chemistry expert said fine aluminum particles used in propellants are vulnerable to static electricity, making explosions possible when residues are removed or handled with various materials. However, the expert said the risk of an explosion may have been considered significantly lower because the accident occurred in a room where water was used for cleaning. Choi Gi-il, a professor of military studies at Sangji University, said the explosion may have been caused by sparks generated by friction, external impact or other minor factors during the cleaning of equipment contaminated with explosives. "There is a high possibility that sparks occurred during the cleaning of tools or mixing containers contaminated with explosives, due to friction, external impact or other small factors, leading to a chain explosion," Choi said. This is not the first fatal explosion at Hanwha Aerospace's Daejeon plant. In May 2018, an explosion at the same site killed five workers. In February 2019, another explosion and fire occurred in a propellant separation room in Building 70, killing three workers. The previous accidents also prompted criticism over the company's safety management. After the 2018 accident, the Labor Ministry found 486 violations during an inspection in the field of occupational safety and health, with 126 cases referred for legal action. At the time, the Daejeon plant's process safety management, or PSM, rating was downgraded to M-, the lowest level. The latest accident could therefore go beyond a single process failure and raise broader questions over whether safety management has been properly carried out at defense and space facilities that handle high-risk materials, especially given the limited transparency surrounding defense contractors. 2026-06-04 16:30:37

June Mock Exam for 2027 College Entrance Test Shows Easier Difficulty Compared to Last Year The June mock exam for the 2027 College Scholastic Ability Test was conducted nationwide on June 4. Education experts noted that while the Korean and math sections were somewhat easier compared to last year's exam, which was deemed exceptionally difficult, the questions aimed at differentiating top students remained challenging. The Korean section was formatted similarly to last year's exam, with questions that were either comparable or slightly easier. The reading materials included a variety of topics such as information asymmetry and surface tension of liquids. In the literature section, many works were linked to EBS materials, enhancing the perceived connection. However, students who struggled to grasp the logical flow of the passages likely faced difficulties in answering. The math section also mirrored last year's exam in difficulty, with the common subjects addressing core concepts in a balanced manner. The elective subjects (probability and statistics, calculus, geometry) included questions that assessed overall learning completeness from basic concepts to applications. High-difficulty questions aimed at differentiation were found in the Math II sections on derivatives and sequences, following last year's trend. In the English section, assessments indicated a level similar to last year's first-grade pass rate (3.11%). The length of the passages and the presence of unfamiliar vocabulary likely contributed to a heightened perceived difficulty for students. Notably, attractive distractors were included in question types like fill-in-the-blank inference to ensure differentiation among top students. Experts advised that the results of this mock exam should be used as a tool for college admission strategies. Lim Sung-ho, head of Jongno Academy, stated, "Despite the English section being similar or slightly easier than last year's very difficult exam, it likely felt quite challenging for students. While there were no high-difficulty killer questions, sufficient differentiation was achieved through the process of finding the correct answers among the options." Kim Byeong-jin, head of Etoos Education Assessment Research Institute, commented, "The Korean and math sections were generally not difficult. However, students likely faced challenges with the length of the English passages and vocabulary." He added, "It is not advisable to hastily determine early application thresholds based solely on the June mock exam results. This exam should serve as a guide for students to reflect on their learning situation and address any shortcomings rather than just checking scores." Meanwhile, the grading results of this June mock exam are scheduled to be communicated to students on July 1. Students should use the notified scores and analysis of incorrect answers to reorganize their final study roadmap for the remaining five months.* This article has been translated by AI. 2026-06-04 16:30:00

Defense and Industry Ministries Accelerate Cooperation for Defense Exports The South Korean government is consolidating its efforts across multiple ministries to enhance the development and export of advanced defense technologies. On June 4, the Ministry of National Defense and the Ministry of Trade, Industry and Energy convened the 12th Defense Industry Development Council in the National Defense Ministry's conference room in Yongsan, Seoul. The meeting addressed eight key agenda items, including stable procurement cooperation for dual-use drones and plans for a major shift in defense artificial intelligence (AI) collaboration. The government has committed to strengthening cooperation in fostering advanced strategic industries such as AI, drones, and aviation engines. The Ministry of National Defense reported on its policy directions, including establishing standards for dual-use drones and building a joint military-civilian testing system. Additionally, the ministries announced plans for inter-agency collaboration to accelerate the development of AI products and services for defense, as well as the creation of specialized AI foundation models. The Ministry of Trade, Industry and Energy also shared strategies to enhance the ecosystem for civil-military technology cooperation, including expanding investments in dual-use technologies and accelerating the virtuous cycle between advanced technologies and the defense industry. The Defense Acquisition Program Administration reviewed the status and future plans for advanced aviation engine development through written reports on joint projects involving multiple ministries. With the goal of becoming a leading defense power, the government is also preparing measures to promote defense exports to enhance the competitiveness of the K-defense sector. The Ministry of Trade, Industry and Energy is working to establish a Defense Export Civil Industry Cooperation Task Force (TF) to systematically support private sector collaboration in defense exports. This initiative aims to identify and develop industrial cooperation items, create comprehensive cooperation packages, and oversee promotion and implementation checks. The Ministry of National Defense is also discussing ways to support defense exhibitions led by the Korea Defense Industry Association, with plans to draft guidelines for exhibition support by the end of the year. Currently, domestic land weapon defense exhibitions are divided between the Army Association's KADEX and the civilian exhibition DX KOREA. Furthermore, the Ministry of National Defense reported on the establishment of a "Defense Export Support Strategy" to enhance cooperation in defense diplomacy and logistics support with purchasing countries. Ahn Gyu-baek, Minister of National Defense, emphasized that the defense industry is a national strategic sector that underpins national security and is directly linked to economic growth. He stated, "We will swiftly advance the tasks discussed at the council to establish a foundation for self-reliant defense and enhance our competitiveness in the global defense market." Kim Jeong-gwan, Minister of Trade, Industry and Energy, noted, "We will strengthen collaboration between the Ministry's Manufacturing AI Transformation (M.AX) Alliance and the defense sector, while also enhancing the overall capacity of the defense ecosystem, including small and medium-sized shipyards and related companies, to support regional economies through civil-military cooperation."* This article has been translated by AI. 2026-06-04 16:27:00

Post-Election Focus Shifts to Financial Markets and Investment Trends As the June 3 local elections conclude, the financial markets are refocusing on interest rates, stock prices, and real estate fundamentals. With market variables that were overshadowed by the political calendar now coming to the forefront, attention is turning to the direction of idle funds in the market. According to Hana Financial Research Institute, funds flowing into asset management in the first quarter of this year reached 114.4 trillion won, significantly outpacing the 21.1 trillion won that entered bank deposits by a factor of 5.4. The net inflow of funds surrounding the stock market, including investor deposits and comprehensive asset management accounts (CMA), also totaled 31.8 trillion won, exceeding the net inflow into bank deposits. This surge in investment sentiment was driven by an unprecedented rise in the KOSPI index. If this trend continues throughout the year, the gap between net inflows into asset management and bank deposits could reach 360 trillion won. Typically, during election periods, investors tend to adopt a wait-and-see approach, favoring safe assets like deposits. However, with the stock market consistently reaching new highs in the first half of the year, there is potential for the increased liquidity in the market post-election to be absorbed by the investment sector in the latter half of the year. Experts believe that considering corporate earnings and fundamental strengths, a KOSPI index of 10,000 is achievable. Korea Investment & Securities raised its forecast for the KOSPI's upper limit in the second half of the year from 9,250 to 11,000, citing improved profit outlooks for semiconductor companies as a key factor. The real estate market is also expected to be another destination for incoming funds in the second half of the year. Signs of recovery in transactions, particularly in certain areas of Seoul, suggest that idle funds may flow into the real estate sector. Observers note that investors looking to realize profits from the stock market or those with cash reserves may begin purchasing real estate. However, the financial sector believes that the direction of fund flows in the second half will ultimately depend on interest rates. The Bank of Korea is expected to raise the benchmark interest rate at least twice in the latter half of the year, which could enhance the appeal of deposits. Rising interest rates may weaken investors' appetite for riskier assets and keep market funds tied to safer investments. As interest rates rise, the repayment burden for those engaged in leveraged investments will increase, and their capacity for new borrowing will inevitably diminish. The fixed interest rates for five-year mortgage loans from the five major banks—KB Kookmin, Shinhan, Woori, Hana, and NH Nonghyup—have risen to between 4.34% and 7.32%, up from 4.26% to 7.10% at the end of last month. The market anticipates that loan rates could soon surpass 8%. A financial sector official stated, "Typically, investor sentiment revives after elections, but in a rising interest rate environment, the pace of fund movement may be slower than expected. Ultimately, yields will determine the flow of liquidity." 2026-06-04 16:27:00

Calls for Leadership Change in People Power Party After Local Election Loss Calls for the resignation of Jang Dong-hyuk's leadership in the People Power Party are growing among lawmakers aligned with the Pro-Han Dong-hoon faction following the party's defeat in the June 3 local elections.Ahn Sang-hoon, a member of the faction, stated on Facebook on June 4, "Jang Dong-hyuk's leadership has absurdly expelled former leader Han Dong-hoon, while Oh Se-hoon, who distanced himself from Jang's leadership, managed to retain Seoul. This is a signal for the rational reconstruction of conservatism. Public sentiment reflects the will of the people, and the party leadership must quickly determine their future."Park Jeong-hoon also held a press conference at the National Assembly with fellow lawmakers, including Bae Hyun-jin, stating, "The leadership will reflect on their decisions, but for our party to be reborn as a beloved entity, the local elections must serve as a turning point. I believe the opinions of the lawmakers are aligned. I expect a consensus to be reached in the party meeting." Kim So-hee, a lawmaker with less factional affiliation, also posted on Facebook, urging, "The leadership of the People Power Party must resign in response to the public's reprimand."Jin Jong-o remarked on Han's victory in the Busan North District by-election, saying, "This is the last warning and opportunity from the public for the People Power Party to change. It is a mandate to rebuild conservatism through unification. We must not dismiss or ignore the voices calling for reform any longer."However, Jang appears set to ignore the calls for resignation and continue in his role. After leaving the Central Party's counting room in Yeouido on the morning of June 4, he did not appear in public and skipped the afternoon party meeting due to health reasons. Instead, he posted on Facebook, stating, "Despite the difficulties faced in this election, we have maintained the spark of hope. I will not shy away from the heavy responsibility placed upon me and will work with party members to find a new path forward."* This article has been translated by AI. 2026-06-04 16:24:00

Toss Bank Enhances 'Easy Employment Contract' Service Toss Bank has added document issuance capabilities to its 'Easy Employment Contract' service, allowing users to handle everything from contract signing to document preparation in one go. On June 4, Toss Bank announced that it has integrated the ability to issue health examination certificates, resident registration documents, and bank account copies into its 'Easy Employment Contract' service. This initiative aims to facilitate the contract signing process for both employees and employers. Previously, workers had to visit multiple agencies to obtain necessary documents for payroll or hygiene-related administrative procedures after signing an employment contract. With this new feature, both employees and employers can now instantly issue various required documents directly through the app after signing the contract. The available documents include health examination certificates, resident registration documents, and Toss Bank account copies. Notably, for those working in food-related industries, the health examination certificate, which is mandatory, previously required a return visit to the health center to collect results. Now, users can check and save the results in PDF format directly through the Toss Bank app. The service has also been enhanced for individual business owners. Toss Bank has integrated the 'Easy Employment Contract' service into its 'Mini Home' feature for individual business account holders. This allows business owners to manage various tasks related to business operations, including financial management, hiring, contract signing, and document preparation, all within the app. A Toss Bank representative stated, "The 'Easy Employment Contract' service began with the goal of finding ways to protect the rights of both workers and employers more conveniently and securely. We will continue to identify and address the practical challenges faced by all workers in the field using financial technology."* This article has been translated by AI. 2026-06-04 16:21:00

Independent Lawmaker Kang Sun-woo Requests Bail Amid Corruption Charges Independent lawmaker Kang Sun-woo, who has been charged with receiving 100 million won in campaign contributions, has recently filed a request for bail in court. According to legal sources on June 4, Kang submitted his bail request to Judge Lee Chun-geun of the Seoul Central District Court on June 2. Bail is a legal procedure that allows for the release of a defendant from custody under certain conditions, such as the payment of a security deposit. Once a bail request is filed, the court will hold a separate hearing to hear arguments from both the defendant and the prosecution before making a decision. A hearing date for Kang's request has not yet been scheduled. Kang was arrested in March on charges of violating political funding laws, including accepting 100 million won from former Seoul city council member Kim Kyung as a bribe for campaign favors ahead of the January 2022 local elections. At that time, Kim, who was affiliated with the Democratic Party, was nominated as the sole candidate for the Democratic Party's city council seat in Kang's constituency of Gangseo-gu, Seoul, and subsequently won the election. The prosecution has also charged Kang's former aide, Nam Mo, who facilitated the meeting between Kang and Kim, along with Kim. While Kim and Nam have acknowledged the charges in court, Kang has denied all allegations.* This article has been translated by AI. 2026-06-04 16:21:00

Kakao Games Nominates Kim Tae-hwan and Lee Si-woo for Board Positions Ahead of Shareholder Meeting Kakao Games is set to hold an extraordinary shareholders' meeting to nominate Kim Tae-hwan, Vice President of Line Games, and Lee Si-woo, Chief Business Officer of Kakao Games, for board positions. Kim is expected to assume the role of new CEO following the meeting. The company announced on June 4 that the extraordinary shareholders' meeting will take place on the 22nd at the Kakao AI Campus in Yongin, Gyeonggi Province. The agenda includes the election of two internal directors, one external director, and one non-executive director. Kim holds a degree in Political Science and International Relations from Yonsei University and has previously served as Vice President at Nexon Korea, Chief Business Development Officer at Nexon Japan, and Vice President at Nexon America. He is recognized for his extensive experience in both domestic and international gaming operations and global business development. Joining Kim as a candidate for internal director is Lee Si-woo, who has held various roles at NHN and Wemade, and previously served as the head of the mobile business division at Kakao Games. The external director candidate is Seo Seok-ho, Managing Director at Petrico Partners. Seo graduated from Washington University in St. Louis with a degree in Business and completed his MBA at Dartmouth College's Tuck School of Business. Industry analysts believe that this extraordinary shareholders' meeting will pave the way for Kakao Games to establish a new management structure and refine its growth strategies, including new game releases and global expansion. The company stated, "The introduction of a co-CEO system is currently under review, and specific details will be announced once the appointments are confirmed through the board and extraordinary shareholders' meeting procedures later this month." 2026-06-04 16:18:00

Starbucks Korea card spending drops after 'Tank Day' backlash SEOUL, June 04 (AJP) - Estimated credit and debit card spending at Starbucks Korea fell by more than 10 billion won ($6.53 million) last month from April, data showed, as a marketing controversy weighed on the coffee chain. Estimated card spending at Starbucks reached 121.19 billion won in May, down about 13.1 billion won from 134.32 billion won in April, according to Mobile Index on Thursday. The decline deepened in the latter half of the month. Weekly spending slipped from 32.16 billion won during May 11 to 17 to 23.69 billion won during May 18 to 24, when the "Tank Day" controversy erupted, before falling again to 21.46 billion won during May 25-31, the second consecutive weekly drop. The figures cover only estimated domestic card payments and exclude corporate bank transfers, cash, gift certificates, simple payments and in-app transactions, the company said. Demand still held firmer on other channels. As of 4 p.m. on Thursday, Starbucks vouchers ranked first and second in the cafe category on the KakaoTalk Gift platform, led by a 50,000-won e-card voucher. Starbucks Korea triggered the backlash on May 18, the anniversary of the Gwangju Democratic Uprising, by using the term "Tank Day" to promote a tumbler discount event. As criticism spread online, Shinsegae Group dismissed Starbucks Korea's chief executive and issued a public apology. 2026-06-04 16:15:29