Korean builders win $40 billion in overseas orders

Korean builders win $40 billion in overseas orders
Date: October 09, 2008
Source: Ministry of Land, Transport and Maritime Affairs



According to the Ministry of Land, Transport and Maritime Affairs and the International Contractors Association of Korea (ICAK) on Wednesday (Oct. 8), the amount of overseas construction orders won by Korean enterprises exceeded the US$40 billion mark, about two months after they topped $30 billion in late July.

To be exact, overseas construction orders amounted to $40.4 billion as of Oct. 7 this year, a record increase from $39.8 billion in 2007.

Korean builders have consistently won medium- and large-scale orders, each of which amounts to hundreds of millions of dollars on average. In July, a construction consortium won a supersize order worth $6.3 billion for the Al-Zour refinery project in Kuwait, the ministry said. Other major projects include the Al-Shuweihat S2 desalination project in the UAE ($810 million for Samsung C&T and $800 million for Doosan Heavy Industries & Construction), the Manzanillo LNG storage tank project in Mexico ($630 million for Samsung ENG), and the Manifa gas facilities project in Saudi Arabia ($500 million for GS Engineering & Construction).

The $40 billion-worth of overseas orders were an increase of 45.4 percent year-on-year, mainly due to increases in strong demand in the Middle East (an increase of 36.2 percent) and in Asia (an increase of 56 percent).

Orders for plant construction projects accounted for 60 percent, or $24.26 billion, of all overseas orders won by Korean builders this year. Civil engineering projects recorded a rapid growth rate of 118.6 percent year-on-year. Orders for general engineering projects reached $550 million, up 75.8 percent from last year.

Top 10 construction companies accounted for 71 percent of all overseas orders this year -- Hyundai Engineering & Construction ($6.08 billion), GS Engineering & Construction ($5.13 billion), Daelim Industrial ($3.08 billion), SK Construction ($2.84 billion), POSCO Engineering & Construction ($2.67 billion), Doosan Heavy Industries & Construction ($2.47 billion), Daewoo Engineering & Construction ($2.07 billion), Samsung C&T ($1.68 billion), Woolim Construction ($1.56 billion), and Samsung ENG ($1.29 billion). Small- and medium-sized enterprises won $5.82 billion in orders, up 30.5 percent year-on-year.

The ministry said the Korean builders' overseas construction projects will keep contributing significantly to the national economy for the time being amid the difficult economic situation caused by the U.S. financial turmoil. The ministry predicted that Korean builders will continue to win overseas projects mainly in the Middle East, which has sufficient holdings of petro-dollars.

The ministry also predicted that Korean builders could rack up $50 billion this year in overseas projects, if they succeed in winning orders for the Hasian power generation/desalination project in the UAE ($6.2 billion), the Jumeirah village center project in Dubai ($600 million), the Landbridge railway project in Saudi Arabia ($4.9 billion), and the Sidi Abdellah land leveling project in Algeria ($1.5 billion).

To support Korean conglomerates' efforts to win overseas orders, the ministry plans to take high-level diplomatic initiatives with major countries in the Middle East, Latin America, Southeast Asia and Africa, and introduce Korea's technologies and enterprises to them.

While closely watching what effects the U.S. financial crisis will have on the overseas construction market, the ministry will carefully study the feasibility of overseas real estate investment projects and conduct risk management of existing projects.

Meanwhile, the ministry urged Korean builders to refrain from excessively competing with each other in their bidding efforts especially in the Middle Eastern region, but rather to engage in fair play under ICAK guidance.

By Chung Myung-je
Korea.net Chief Staff Writer