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Executive Vice President Han Seung of Daewoo E&C’s overseas business division speaks during the Korea-Vietnam Economic Cooperation Forum held in Hanoi, Vietnam, Dec. 18, 2022. (Park Hae-mook/The Korea Herald) |
Daewoo Engineering & Construction will beef up its presence in the Indonesian market where the country has high demand for infrastructure arising from capital relocation and economic development.
“Indonesia has the largest construction market among (Association of Southeast Asian Nations) member states, thanks to its (population of) 270 million, large land size and over 5 percent annual economic growth rate,” said Han Seung, executive vice president of Daewoo E&C’s overseas business division in an email interview with The Korea Herald.
The Southeast Asian nation's plan to relocate its capital city from overcrowded and sinking Jakarta to Nusantara on Borneo island has "boosted the growth potential of the country’s construction market,” Han said. The new capital city worth $32 billion is projected to be complete in 2045.
Indonesia's demand for new infrastructure is also increasing. “Indonesia has been launching many plant and infrastructure projects to harness its abundant mineral, petroleum and gas resources,” Han said.
Many international builders are eyeing the Indonesian market to seize new business opportunities and Korean firms have also established their offices in the country to participate in state-led construction projects, Han noted.
Daewoo E&C is one of the Korean construction companies ramping up efforts to expand their footing in the burgeoning Indonesian market.
Daewoo E&C first entered the Indonesian market in 2020 by signing a $50-million contract to carry out piping works at the BP-operated liquefied natural gas facility in the Tangguh gas field, in the province of West Papua. Daewoo E&C’s piping works were part of the Tangguh expansion project, which included the construction of a third liquefaction unit.
“Based on its experience in overseas construction projects, the company successfully completed the project in Tangguh,” Han said. Daewoo E&C’s experience in construction projects, particularly in remote areas, helped the company improve its efficiency and allowed it to complete 30 percent more piping works than originally commissioned, he added.
After finishing the Tangguh project in June this year, the Korean builder is now "in search of additional state-led infrastructure projects in Indonesia,” Han said.
Daewoo E&C is currently looking for infrastructure projects that can attract official development assistance from the Korean government and public-private partnerships that utilize funding from export credit agencies in Korea.
Plant construction projects that require high-end construction technology, in which Daewoo E&C may have advantages over Indonesian construction companies, are also options that the company is looking to join in the future, it added.
Han added that Daewoo E&C expects the Indonesian construction market will become more favorable to international construction companies in the future.
“Indonesia had a relatively low national credit rating and some loopholes in its policies regarding PPP projects and foreign investment, but the country is moving to change the related policies to make it a more attractive market for foreign investment. More PPP construction projects are expected to open in the future, and more investment from foreign countries will follow,” Han said.
While looking into new opportunities in Indonesia, Daewoo E&C is also planning to expand its presence in other countries.
“In Bangladesh, Daewoo E&C is planning on a large-sized PPP project to build infrastructure with the Korea Overseas Infrastructure & Urban Development Corporation and the Korea Expressway Corporation,” Han said.
Daewoo E&C will also be more actively engaged in infrastructure projects and engineering, procurement and construction projects in other developing countries.
“In countries that have abundant gas and oil resources, there are many projects launched by state-led energy companies and international oil companies. In terms of infrastructure projects, many Korean companies are now joining bids to win contracts funded by the Economic Development Cooperation Fund and multilateral development banks,” Han said.
