As of May 30, Korean construction firms won a total of $500 billion worth of overseas projects since they landed their first project in Thailand 47 years ago.
Hanwha Construction’ s huge $7.8 billion project order to build 100,000 houses in Iraq put the total overseas construction projects won by Korean firms over the $500 billion level to total $501.3 billion as of the end of May, the Ministry of Land, Transport and Maritime Affairs (MLTM) said on June 13.
The first overseas construction order won by a Korean company was won by Hyundai Construction in 1965 to build a highway linking Patani and Narathawat in Thailand.
By region, the Middle East was the largest with $301.9 billion, 60 percent of the total, which played a huge role in the development of the Korean economy from 1960-1970, wiping out damages incurred during the Korean war from 1950-53, while $147.9 billion worth of projects came from Southeast Asia, mainly in Singapore and Vietnam. Central and South America accounted for $16.5 billion in construction projects, or 3 percent of the total, and African countries and Europe each accounted for about 4 percent of the total with $16.4 and $18.6 billion, respectively.
By sector, plant construction projects accounted for 54 percent with $268.3 billion worth of projects, followed by construction at $120.6 billion, or 24 percent, civil engineering projects at $92.9 billion, or 18 percent, and civil works coming in at $19.5 billion, or 4 percent, the MLTM said.
Worth noting is the fact that about $300 billion worth of projects were won since 2007, which indicates a second boom in construction projects in the past four years, particularly in the Middle East region. The ministry said if the current trend continues, it would not be wrong to say that Korean builders might be able to pick up $100 billion worth of projects overseas annually from 2014, catapulting Korea to the rank of 5th largest builder worldwide.
Some of the big projects won by Korean construction firms include the large canal project in Libya worth $10.056 billion by Dongah Construction, which took nearly a decade to complete; the South Par Oil Development Project in Iran worth $5.852 billion undertaken by Hyundai, GS, and Daelim construction companies with construction scheduled from March 2002 to March 2013; the Burj Khalifa, the tallest building in the world, a joint project involving Samsung C&T for $360 million, which took from January 2005 to December 2009 to complete; and the UAE nuclear power plant project won by a Korean consortium worth $18.6 billion, whose construction was kicked off in December 2009 and is scheduled for completion in May 2020, which is the largest single project won by Korean builders in the Middle East.
The overseas projects have been of great help to construction firms who have seen a slump in construction projects at home, falling from a high of 107.3 trillion won in 2006 to 103.5 trillion won in 2011. Meanwhile, overseas construction projects won by Korean firms expanded from 16.1 trillion won to 65.1 trillion won during the same period.
However, one of the drawbacks from overseas projects is the rising cost of the projects, which has cut into the profits of Korean builders, the MLTM said.
Minister of Land, Transport and Maritime Affairs Kwon Do-youp said the construction industry has accomplished a landmark achievement by securing more than $500 billion worth of construction projects in the last 47 years as of the end of May this year. The industry has been creating a base for the national economic take off and played a role as the medium to speed up growth over the past five decades.
What’ s encouraging is the fact that $300 billion worth of the overseas projects came since 2007, showing that the construction industry is expected to secure more projects annually, with the global construction market projected to grow 5 percent per year from now. #