Builders lead 2nd Middle East boom

Korea’s aggregate construction exports exceed $500 billion mark


Korean builders have secured a combined $500 billion in overseas construction orders as of Wednesday, indicating the beginning of the “second Middle East boom.”

Since Korea started overseas construction in 1965, the accumulated orders have exceeded $501.3 billion, the Ministry of Land, Transport and Maritime Affairs said Wednesday.

“It’s a milestone at a time of difficulties globally,” Land Minister Kwon Do-youp told reporters, saying the “second Middle East boom” has already started.

“There would be more good news especially coming from countries such as the United Arab Emirates, Qatar and Saudi Arabia where President Lee Myung-bak visited recently.”

The announcement came after Hanwha Group reported its $8 billion contract signed on May 30 to build a housing complex in a new town of Iraq.

The building project, which will build 100,000 houses in Bismayah, a satellite city of Baghdad, is the nation’s second-largest overseas deal next to the $20 billion nuclear plant contract with the United Arab Emirates in 2009.

The ministry said overseas construction has been more active in recent years, with more than half of the projects carried out in just the past five years.

The growing trend could make Korea one of the top five players in the global construction market by 2014, with annual orders reaching $100 billion, the ministry predicted.

According to Engineering News-Record, a U.S. weekly magazine, Korea’s ranking in the global construction industry rose from 12th with a 1.9 percent market share in 2003 to seventh with a 4.8 percent market share in 2010.

“The recent slowdown in the domestic construction industry has affected local builders negatively. However, with overseas orders growing steadily, their sales abroad could soon outpace those in the domestic market,” said a ministry official.

In terms of export volume, the construction industry has surpassed the nation’s key sectors such as vessels, cars and semiconductors since 2007.

The nation’s No. 1 export items were semiconductors with $33.2 billion in 2006, vehicles with $34.5 billion in 2007 and vessels with $56.6 billion in 2011.

Overseas orders in the construction sector surged from $16.5 billion in 2006 to $39.8 billion in 2007 and $59.1 billion in 2011.

Of the $500 billion orders over the past 47 years, the Middle East makes up 60 percent, or $301.9 billion, followed by Asian countries such as Singapore and Vietnam with $147.9 billion, or 30 percent of the total.

Central and South America account for 3 percent of the construction orders with $16.5 billion, while Africa and Europe make up 3 percent and 4 percent, respectively.

In order to continue the growing trend in overseas construction, the government plans to offer support in diverse ways.

The number of government industry experts who support local companies’ global operations has increased from 2,500 in 2011 to 3,500 this year.

The ministry has also created a 400 billion won fund to support related infrastructure, and plans to invest an additional 36.7 billion won this year into research and development activities.

By Lee Ji-yoon (jylee@heraldcorp.com)