Saudi Arabia to ease rules for Korean builders

Korea and Saudi Arabia have agreed to exempt Korean builders from business restrictions for them to enter the 70 trillion won ($60 billion) housing market of the Middle Eastern country, officials said Thursday.

Land, Transport and Maritime Affairs Minister Kwon Do-yeop met Saudi Arabia’s Housing Minister Shuwaish Al-Duwaihi in Seoul on the day to confirm the agreement tentatively made during summit talks in February.

Despite their strong presence globally, Korean construction firms have not been able to do business in Saudi Arabia for almost three decades due to the nation’s strict regulations on foreign companies. 

Under the new agreement, the top 20 Korean companies and the state-run land developer Land & Housing Corp. are expected to be exempted from diverse regulations and be given support in bidding.

“Together with regulatory support, we will consider allowing Korean firms to participate in bidding for a housing project without local agencies,” the Saudi Arabian minister was quoted as saying by the ministry.

Officials said that local companies would enjoy the proposed benefits as early as late July when the bidding for a housing project of 7,000 units is scheduled to start in the country.

According to the ministry, 500,000 houses are planned for Saudi Arabia this year alone.

If a Korean firm wins the bidding it would come 27 years after Hanjin Heavy Industries participated in a construction project worth $481.36 million in 1985, the ministry said.

The Land Ministry since last year has held several meetings with the Saudi Arabian government to the pave way for local firms to enter the Saudi Arabian construction market.

The issue gained momentum after it was discussed when President Lee Myung-bak met Saudi King Abdullah bin Abdul Aziz al Saud on his official visit to the Middle East in February.

On the day, the Saudi Arabian delegation also met representatives of 20 local firms that will participate in future construction projects and visited new cities being built, officials said.

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