Seoul, South Korea – South Korea's construction industry has reached a significant milestone, surpassing $1 trillion in cumulative overseas construction orders. This achievement marks a remarkable 59 years since Hyundai Engineering & Construction secured its first foreign contract in November 1965 to build the Thap Than – Narathiwat highway in Thailand.
According to the Ministry of Land, Infrastructure and Transport, the cumulative value of overseas construction orders exceeded $1 trillion (approximately ₩1,468 trillion) as of last month.
Despite challenging global economic conditions, the construction industry managed to secure a substantial number of contracts towards the end of the year, enabling it to achieve this historic milestone.
Minister of Land, Infrastructure and Transport, Sang-Woo Park, highlighted the significance of this achievement in his New Year's address, stating that it had made a significant contribution to the nation's economic growth.
While the annual value of overseas construction orders for last year fell slightly short of the government's target of $400 billion, it still marked the highest level since 2015.
The Overseas Construction Association reported that the value of overseas orders from January to November 2023 stood at $32.69 billion, with December's figures yet to be released.
Overseas construction orders had reached a peak of $71.6 billion in 2010, but subsequently declined due to factors such as the US-China trade war and a decrease in orders from the Middle East. However, the industry has since rebounded, with annual orders increasing consecutively since 2021 to reach $33.3 billion in 2023.
Middle East Drives Growth
The Middle East region played a pivotal role in driving the growth of overseas construction orders last year. The region accounted for approximately 50% of the total orders in 2023, compared to 34% in the previous year. This surge was primarily attributed to a series of large-scale projects awarded to South Korean companies in Saudi Arabia, following Hyundai Engineering & Construction's $5.08 billion contract for the Amirral petrochemical plant.
In April 2023, Samsung Engineering & Construction and GS Construction secured a record-breaking $6.08 billion contract from Saudi Aramco for the Fadhili gas plant project.
"The relatively stable oil prices last year encouraged Middle Eastern countries to continue their investments in infrastructure projects," said Yong-kwang Lee, Director of the Global Business Support Division at the Overseas Construction Association. "Additionally, we have witnessed a notable increase in investment-type projects undertaken by South Korean companies."
Investment-type projects involve companies contributing a portion or all of the project's costs and sharing profits or losses based on their equity stake. The South Korean government aims to expand its involvement in high-value investment-type projects to diversify away from simple construction contracts.
Challenges Ahead
While the achievement of $1 trillion in cumulative overseas construction orders is a significant milestone, the industry faces several challenges going forward. Political instability and global economic uncertainty could impact the outlook for overseas construction projects in 2024.
[Copyright (c) Global Economic Times. All Rights Reserved.]
