By Kim Jae-heun
Local construction firms have picked up steam in the Middle Eastern market, winning extensive contracts to mark the largest procurement in five years.
The contracts inked between Jan. 1 and Feb. 20, accounted for 6.9 trillion won ($5.77 billion), which is 16 times greater than the 430 billion won obtained in the same period last year. The contracts hold significance considering the total value of the projects from the region only accounted for 11 percent of all contracts last year, but it has risen to 66 percent for this year.
The market stagnated in recent years due to the plunge in crude oil prices and unstable international market situations taking a toll on Korean construction companies seeking to clinch new business deals.
According to the International Contractors Association of Korea (ICAK), as of February, local companies won a total of 94 overseas contracts valued at 10.54 trillion won ($8.7 billion), a 12 percent increase from the same period the previous year.
This marks the highest since January 2015, when the total value of contracts procured recorded $8.8 billion.
Contracts from the Middle East account for nearly two thirds of the value of contracts worth $5.77 billion, followed by the Asian market with $2.6 billion and Central and South America worth $300 million.
Last year, construction companies suffered from a drop in terms of order volumes to $22.3 billion, down 31 percent from the previous year.
The ICAK said 58.6 percent of the orders were agreements to construct industrial facilities including the construction of power plants, oil refineries and chemical plants, for which domestic firms show superiority over competitors.
Samsung C&T Corp. inked a deal with the United Arab Emirates government, landing contracts to construct a 2400MW combined cycle thermal power plant in the Fujairah region some 300 kilometers east of Abu Dhabi, worth 1.15 trillion won.
In February, Hyundai Construction secured a 3.3 billion won deal with Panama Metro (MPSA) to construct a Subway Line. The company won the contract in a consortium with POSCO and Hyundai Engineering, of which Hyundai Construction owns a 51 percent share along with POSCO and Hyundai Engineering holding 29 percent and 20 percent of shares respectively.
However, it is not all good news as the prolonged spread of the new coronavirus could affect local construction firms as Middle Eastern countries could ban the entry of people traveling from Korea, a measure which Vietnam, India and Japan have already enforced.
Park Se-ra, a researcher at Shinyoung Securities said if the virus continues to spread, it could affect the contracts as well as international crude oil prices.
"Local construction companies could suffer the same effects as they were affected by during the MERS outbreak in 2015," Park said.
 |
| Park Dong-wuk, president and CEO of Hyundai Engineering & Construction |
The contracts inked between Jan. 1 and Feb. 20, accounted for 6.9 trillion won ($5.77 billion), which is 16 times greater than the 430 billion won obtained in the same period last year. The contracts hold significance considering the total value of the projects from the region only accounted for 11 percent of all contracts last year, but it has risen to 66 percent for this year.
The market stagnated in recent years due to the plunge in crude oil prices and unstable international market situations taking a toll on Korean construction companies seeking to clinch new business deals.
According to the International Contractors Association of Korea (ICAK), as of February, local companies won a total of 94 overseas contracts valued at 10.54 trillion won ($8.7 billion), a 12 percent increase from the same period the previous year.
This marks the highest since January 2015, when the total value of contracts procured recorded $8.8 billion.
 |
| Lee Young-ho, president and CEO of Samsung Construction & Trading Corporation |
Last year, construction companies suffered from a drop in terms of order volumes to $22.3 billion, down 31 percent from the previous year.
The ICAK said 58.6 percent of the orders were agreements to construct industrial facilities including the construction of power plants, oil refineries and chemical plants, for which domestic firms show superiority over competitors.
Samsung C&T Corp. inked a deal with the United Arab Emirates government, landing contracts to construct a 2400MW combined cycle thermal power plant in the Fujairah region some 300 kilometers east of Abu Dhabi, worth 1.15 trillion won.
In February, Hyundai Construction secured a 3.3 billion won deal with Panama Metro (MPSA) to construct a Subway Line. The company won the contract in a consortium with POSCO and Hyundai Engineering, of which Hyundai Construction owns a 51 percent share along with POSCO and Hyundai Engineering holding 29 percent and 20 percent of shares respectively.
 |
| Choi Sung-an, president and CEO of Samsung Engineering Co., Ltd. |
Park Se-ra, a researcher at Shinyoung Securities said if the virus continues to spread, it could affect the contracts as well as international crude oil prices.
"Local construction companies could suffer the same effects as they were affected by during the MERS outbreak in 2015," Park said.
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